How to Help Protect Your Company from a Small Business Lawsuit
Small businesses can face a variety of lawsuits. A business lawsuit can be a devastating blow to a small business.
When your small business gets sued, you can lose more than just profits. You may suffer costly downtime. Employee morale can be impacted, and as a business owner, you could face a significant amount of stress.
Having small business insurance, and knowing a few other tips, can help protect you from a small business lawsuit. Keep reading to learn more.
Find Insurance Coverage
One of best things that you can do to protect your company from a business lawsuit is to help protect your business before a customer sues. Being proactive about protecting your business means you should be ready if a lawsuit comes your way, rather than scrambling to figure out what to do after the fact.
Purchasing business insurance can be one of the best ways to help protect yourself ahead of time.
BOP insurance, or a Business Owners Policy, is designed to combine multiple types of commercial insurance coverages into one package. This can allow businesses to help protect themselves from various types of lawsuits.
A BOP typically includes general liability insurance and property insurance. General liability insurance can protect you if a customer gets hurt on your property. This policy can cover their medical costs, as well as help to protect you against third-party injury claims. Property coverage helps to protect your business in case of fire, theft, vandalism, and more.
In addition to general liability insurance and property insurance, a BOP may also include cyber risk insurance. Research shows that most small businesses underestimate the cost of recovering from a cyber attack. Having cyber insurance can help with this.
Keep Good Records
Another way that you can protect your small business from lawsuits is to ensure that you are keeping meticulous records and storing them safely. Keep records of transactions, receipts, business deals, employee hires, and other items related to your business.
It can be a good idea to develop a system for keeping and storing these records right from the start. You may want to avoid relying solely on paper copies, even of things such as receipts, as these can be easily damaged or lost. Utilizing a secure cloud storage solution can help protect your records from loss and help make it easier to access them from almost anywhere.
Make Sure Agreements are in Writing
As a new small business, you might find yourself relying on friends or new business contacts to help get a better deal on the services that you might need. But it can be important to remember that no one values your small business the same way you do.
If you enter into an agreement, either for you to do work or provide goods for someone or vice versa, you should put the agreements into writing. This can give you an easy recourse to check if there is a disagreement down the road. It can also protect you in the event that a disagreement leads to a lawsuit or if you decide to file a lawsuit against someone else.
Have a Lawyer On Hand
Helping to protect your small business with the proper insurance policy can be essential. This can help protect you in the event of an injury on your property or a loss of revenue because of a fire or cyber-attack.
However, while insurance can help to protect you from a lawsuit, it can be important to be prepared in case you do face one.
Having an experienced lawyer on hand can help you avoid delays if you face a lawsuit. It can also help you be ready in case you might need to sue someone else for failing to uphold a deal or otherwise harming your small business.
Separate Your Business and Personal Finances
If you're launching a brand new small business on your own, you'll likely be using some of your own personal finances to help fund it. But even if you're the only one providing the finances to launch your business, creating a distinction between your personal and business finances can be important.
If you are the sole proprietor and your business is sued, your own personal finances can also be at risk.
Creating an LLC for your business can be a great way to protect your own personal finances in the event that your small business becomes the subject of a lawsuit.
Help Protect Yourself From a Small Business Lawsuit
A business lawsuit can cost your small business time and money and cause you unnecessary stress. But making sure to keep good records, put agreements in writing, separate your personal and business finances, and having a lawyer on hand can go a long way toward helping to protect your small business.
Another item to consider is a business insurance policy.
Having general liability insurance, property insurance, and cyber risk insurance can help to protect you from the most common threats against small businesses. If the worst-case scenario strikes, you'll be able to rely on your insurance policy to help provide protection and financial support to get your business up and running again.
At PolicySweet®, we help a variety of types of businesses, from retail businesses to food service to contractors, find an insurance solution.
We offer a one-stop BOP insurance option to help ensure that your small business can be protected. Start your quote today to help protect your business.