If a company is owned by the workers collectively under some sort of socialist structure, are they each (perhaps jointly and severally) on the hook for the debts of the business or possibly a judgment from a lawsuit related to, say, a faulty product design or some other mishap? Would this company be able to purchase insurance to protect each worker individually for these types of issues?
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I think an LLC will protect the individuals from being held personally liable from debts. If there was ever a legal judgement, the majority of the time the company takes the hit, and if there is a specific individual at fault, they just get fired. Co-op companies absolutely exist, and they have insurance.
Companies are legal entities that can owe money, but that burden will never fall on its shareholders. If the company goes bankrupt then the share price drops to zero (if it doesn't get bought out first) and people lose the money they put into it. During bankruptcy proceedings the company is ordered to sell off all its assets to pay back as much debt as possible.
Worker owned co-ops are just private companies where the workers own all the shares.