In this part IV of the “how can I protect my small business from lawsuits” articles, I focus on insurance. How can having insurance protect me from lawsuits? It may not, but at least the insurance could pay for the lawsuit—sometimes.
When any of the things mentioned in Part I, II, or III of my recommendations to protect your business from lawsuits do not work, having insurance is a good option. If an adverse party manages to defeat you and tries to go after your assets, a good general liability policy may help. General Liability policies are policies meant to protect a business from liability (fault) imposed by lawsuits or similar claims.
A general liability policy, depending on the type of business, is generally affordable at around $1,000 per year or less than $84 per month. Lawsuits in turn, are only viable, especially if financed by the litigant, when there are tens of thousands at stake. In other words, the worst-case scenario for a business, the lawsuit, will almost always involve a lot more money than the small price of having a general liability policy. In certain circumstances, your insurance has to pay the cost of defending you as well.
While general liability policy is the most popular type of insurance protection, there are other types of insurance that you as business may need to have depending on the size of your business. Some of them are: Workers compensation policy (to protect employees for accidents in the work place), Property Insurance (to protect the physical premises, the real estate of the business), Vehicle Insurance (for vehicle protection), Errors and Omissions insurance or E&O (for errors you may make in the exercise of your particular trade), and, for larger entities, Directors and Officers insurance (to protect directors as the main decision makers of companies, from liability for their decisions).
For more information about how to protect your business from lawsuits email me at firstname.lastname@example.org, or call 305-570-2208.