Business Owners: Four Steps to Limit Liability and Reduce Risk

No business owner wants to face a lawsuit. The good news is that you can proactively take steps to lower your liability and reduce your risk. In this blog entry, we’re going to discuss several essential protections that every business should have in place.

1. Structure your business properly.

How you structure your business is a critical decision. A limited liability corporation, for instance, 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. Meanwhile, corporations provide additional protections that are often important. Speak to a business lawyer and structure your business properly!

2. Purchase insurance to limit your exposure.

Business insurance is available for a wide variety of needs. Here are some of your choices:

  • 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.

  • General Liability Insurance: General liability insurance covers things like accidents, injuries and claims of negligence.

  • 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.

  • Commercial Property Insurance: Commercial property insurance covers losses and damage to physical company property.

We can help you think through your options!

3. Identify risks and implement procedures to minimize them.

It’s impossible to completely eliminate risk in your workplace. But by implementing procedures to minimize risk – ranging from customer slip and falls to the loss of confidential information, depending on the nature of your business – you can reduce their likelihood. Additionally, 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.

4. If it’s in writing… make sure it’s accurate.

When you’re marketing, it’s tempting to push the limits in order to make a sale. But stretching the truth and misrepresenting your business, your products, and your services is an easy way to get sued and potentially lose. Pay attention to any industry regulations and use common sense. It’s also important that your contracts are created by a business lawyer who understands your business – a solid contract provides critical protection against lawsuits.

Running a business requires risk – there is no getting around it. But it is important to do everything that you can to reduce your risk levels. We can help – please contact us today to learn more!

Trembly Law

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