In general there are two ways to deal with the risk of lawsuits, with various hybrids of the two approaches:
1. Buy enough insurance that you don't personally (or your corporation as an entity) get hit. This only works
once, because the first time the insurance company has to pay out (even if they ultimately prevail and only buy lawyer time) you'll find that the insurance price suddenly jumps to "unobtanium." All forms of "listening to insurance companies" to dictate policy ultimately come down to #1, and you only have to be wrong once to be left without that altnerative ever again.
2. Structure the business so there is no point to suing you, and follow
all of the laws strictly to the letter so that the corporate veil cannot be pierced. Then let people sue if they want to. This approach has the benefit of not carrying with it the insane insurance costs that often come with approach #1, nor do you have someone else dictating to you how to run your business. If there are specific risks (e.g. diving) you can buy standard business insurance that has a named exclusion for the diving side so you're covered for things that you really ought to be responsible for in some way (e.g. you have an electrical fault that kills a worker in your shop) yet you don't have to play by their rules with regards to diving ops.
The second approach works mostly because the plaintiff's lawyer is going to do as much investigation as they are able
before they file. Essentially all of the guys in the plaintiff's bar work on a percentage of the recovered money, and if there's not a snowball's chance in hell that they're going to get anything they either won't take the case or won't file.
When a surviving spouse is told that they're going to have to front $25,000 in order to persue the case at all, and by the way, that's just the retainer to get through the first round of discovery (with the expected total legal outlay to get to trial reaching or exceeding six figures), and the business they wish to sue has a negative net worth (meaning you might get a nice big fat judgment but won't be able to collect any of it!) only those who like tilting at windmills will attempt it.
It is not all that terribly difficult to structure a corporation this way and doing so is perfectly legal. Seek competent finanical and legal advise on how to do this
before you incur the liability (trying to do it AFTER someone gets hurt risks your strategy being unwound as a "fraudulent transfer")
(Damn - I see Dave understands it too! BTW, I ran a corporation for more than a decade. Number of lawsuits filed against it? Zero. Guess why? We were
very unattractive targets....
)