All businesses, no matter how big or small, are susceptible to lawsuits. You’ve already taken necessary precautions regarding such an event, perhaps through the purchase of business liability insurance, but are you fully prepared should an actual lawsuit occur?
Some of the top drawbacks in business that will hurt a business if sued are doing business as a sole proprietor, doing business as a general partnership, using a corporation improperly, making personal guarantees, failing to maintain adequate business insurance, sexual harassment in the workplace, using independent contractors, failing to get important business deals in writing, not thinking before you act or speak, and owning all of your assets in one business entity.
It is a good idea to do all you can to prepare your business for a potential lawsuit. Various lawyers advise that every business should be formed or incorporated as a type of limited liability business entity. While there is no 100% guarantee against personal liability exposure when owning a business, incorporating as such can certainly be an effective shield against the associated risks and dangers.
One of the most important ways to prepare if you have not done so already, is to purchase the right type of business insurance to protect you and your business should if you are sued. The insurance company beholds an obligation to defend you and your business on claims where there is a potential for coverage under the policy. In other words, regardless of a lawsuit’s outcome, your insurance company may be required to hire and pay for a lawyer to represent your interests in a litigation.
The insurance company will also have an obligation to cover or indemnify you against any judgments up to the insurance policy limits. To be sure that your business is adequately covered under such a circumstance, contact your insurance company or agent. Know the details to every policy before purchasing as well.
As a business that wants to reduce the chances of a lawsuit, it will help to have well-drafted policies and procedures in place. An employee handbook is a prime example of good planning, as it lets your employees know what is expected of them in the workplace.
And speaking of employees, it also helps to educate your staff about issues specifically pertaining to their work performance. This not only is effective in promoting safety in the workplace, but it helps your business to comply with the law.
Another way to be prepared for a lawsuit is to establish a corporate compliance program in which management regularly reviews operations to ensure compliance with rules and regulations that govern the workplace. Even if your company turns out to be liable on a claim, having a compliance program will lessen potential liability exposure, as it serves as evidence of your efforts as a business owner to do the right thing. It will even help to insulate management from criminal liability for more serious violations.
Whether your insurance company provides, or you seek one yourself, it is imperative to hire an attorney for any business related contracts and business deals. Preventing lawsuits is easier when you have well-drafted documents to back you. In the long run, these documents will also help you save money that may otherwise be spent in defending a lawsuit.
Using an attorney for your business from the get-go will also come in handy, as you will only have around 30 days or less to find legal representation after being sued. If you do not already have a lawyer, it can be challenging to find a good and reputable one in the 30 days or less.
For more information regarding business property insurance, or other business related insurance, contact the professionals at insurancequoteonline.com. For your convenience, click for a free quote or call our insurance specialists at 1.800.649.9094 today.