A lawsuit is the last thing that a business owner wants to address. The good news is that there are proactive steps to lower liability and reduce risk. In this 2-part blog post, we are going to discuss several essential protections that every business should have in place.
Ways To Reduce Liability Risks
Below are 3 of 6 recommended steps to limit liability claims. The general rule of thumb is to implement common sense and protect employees (and visitors):
1. Structure Your Business Properly.
How you structure your business is a critical decision. A limited liability company, for example, provides good protection for most small or sole-proprietorship businesses. If your business is an LLC and you are sued, your potential liability will typically only involve business assets, not personal assets.
Alternatively, corporations provide additional protections that are often important. Consult with a business lawyer and structure your business properly. Decide whether an LLC or corporation is more appropriate for your business.
2. Limit Exposure via Insurance.
Business insurance is available for a wide variety of needs. Here are some of your choices:
Commercial Property Insurance: Commercial property insurance covers losses and damage to physical company property.
General Liability Insurance: General liability insurance covers things like accidents, injuries and claims of negligence.
Home-Based Business Insurance: Usually, homeowners’ insurance policies won’t cover home-based business losses. Some home policies have riders available, or it may make sense to get a specific policy to cover your business. They help when you have people risking injury as they visit your property or work there.
Product Liability Insurance: Product liability insurance protects against losses from lawsuits resulting from a defective product that causes injury or bodily harm.
Professional Liability Insurance: Professional liability insurance protects against suits specific to certain professions, such as losses due to malpractice suits for doctors.
3. Identify Risks And Implement Procedures To Minimize Them.
It is impossible to eliminate risk in your workplace – completely. However, implementing procedures to minimize risk (e.g. customer slip and fall; loss of confidential information; etc.) you can reduce their likelihood. Furthermore, if you can demonstrate in court that you’ve taken reasonable steps to ensure safety, you are in a stronger position should a lawsuit occur. It means that to a judge/jury, you made an effort to ensure that people were adequately protected.