Protect your business from legal action
2 minute read
There is a common misconception among business owners that shutting down a business can protect it from legal action. However, closing your business doesn’t necessarily shield you from liability. Courts generally do not consider whether a business is still operational when making a ruling. Regardless of whether you’re in business or not, you are still liable for any damages linked to your business. That’s why business owners need to secure comprehensive business property and general liability insurance to protect themselves against any business-related claims.
Risks your business can face and how to prevent them:
1. Completed operations risk
Running a small business comes with some unique operational risks. For example, if a plumbing company installs pipes that leaked, resulting in water damage to a property, the costs could be high depending on the size of the property and the extent of damage. In the event of a lawsuit, if the plumbing company does not have general liability insurance, and if the losses are substantial, it might have to declare bankruptcy and close its business. However, they would still be liable for the damages even after their business has closed. In such a case, commercial general liability insurance could help protect your small business.
2. Product liability risk
This type of risk is faced by businesses that sell products to customers. For instance, a wholesaler or a retailer who sells electrical supplies can be held responsible and sued, if a product they sold, started a fire causing a third-party entity to suffer a property damage and/or a bodily injury. With our small business solution, Commercial General Liability coverage is designed to respond to these types of exposures.
3. Premises liability risk
If you own a retail store or if you have a business where customers come to your business premises, you’re exposed to this type of risk. The most common occurrence is a slip-and-fall accident where a client or customer sustains an injury and decides to pursue legal action. The injured party could ask for a large sum based on not only medical costs, but also lost wages and future earnings. In such a case, our small business solution could help respond to the settlement amount.
4. Cybersecurity risk
In today’s digital age, businesses face increasing risks related to cybersecurity. A data breach or cyberattack could lead to the loss of sensitive customer information, financial data, and more. The consequences could include legal action from customers, and regulatory penalties. Cyber liability insurance can help cover the costs associated with data breaches, including legal fees, notification costs, and credit monitoring for affected customers.
Protecting your business
Facing a lawsuit is a stressful, frustrating, and expensive process that can cost your business a lot if you don’t have the right coverage. Legal fees are an expensive part of the process, and they can sometimes even be higher than the settlement amount itself. To learn more about protecting yourself and your business, visit our Small Business Insurance page today.
This blog is provided for information only and is not a substitute for professional advice. We make no representations or warranties regarding the accuracy or completeness of the information and will not be responsible for any loss arising out of reliance on the information.
