I mean even if they do their liability insurance will still be on the hook. It really only serves to protect the business owners and if they didn't do anything fraudulent then you can't pierce the veil and go after them anyway

Because larger LLCs, or those simply operating like a legit business, will carry the appropriate liability insurance in the event that it’s employees screw up or when accidents happen. That’s extremely common, a best practice, and the typical result to settle the claim.

Smaller LLCs, or ones that are badly managed, will be personally involved in operations including any negligent/fraudulent/illegal actions. That involvement negates the standard LLC protections and exposes the ownership to individual liability. You also run into situations where a member claims they weren’t “directly” involved in X matter, but somehow their specific LLCs are constantly being sued for the above issues. A strong argument to make and one that leads to a settlement in order to head off the much larger ramifications.

There’s also a crap ton of legislation coming down at a federal level which is focused on improving the transparency of beneficial ownership, including for LLCs, because such business setups are constantly used for financial crimes.