Starting a business is hard work. If you don’t have the proper insurance in place to protect you from liability, one lawsuit could be all it takes for all that effort to go down the drain. Examine what risks your company faces and the types of insurance many businesses carry that you should consider.
All business owners need to protect themselves in the event that a customer sustains an injury while on the company’s property. These accidents leave owners open to personal injury claims. However, in order for the lawsuit to be successful, he or she will likely have to prove that you were aware of or should have been aware of the problem and failed to take any action to fix it. If you do not own the building in which your business operates, the person may also sue your landlord or any other party responsible for maintaining the property.
Many employers also find themselves faced with issues regarding workplace harassment. If one of your employees harasses another employee, the victim of the harassment may sue you as the employer. Harassment can be in the form of discrimination or through the creation of a hostile work environment. Having a company policy that prohibits harassment and effectively communicating that policy to your employees can go a long way toward preventing claims of harassment.
In addition, if you fail to diligently screen your employees before hiring them and one of them commits a crime while on the clock, you may be held liable. For example, if you run a cleaning service, don’t do background checks before hiring and an employee with a criminal history steals from one of your customers, you may be found liable.
Finally, many types of businesses maintain sensitive data and information about their customers and their employees. Criminals, including identity thieves, routinely seek access to Social Security numbers, addresses and credit card numbers. Keeping your company’s data protected is important if you do not want to find yourself facing liability from a data breach.
If an employee is injured during the course of his or her employment, you may be liable. Therefore, having the proper workers’ compensation coverage in place is crucial. Each state has its own laws in place regarding workers’ compensation, and nearly every type of business is required to maintain some form of coverage.
The workers’ compensation system is in place to allow employees who suffer workplace injuries or illnesses to collect a specific amount of benefits and to protect employers from being sued. In order to qualify for workers’ compensation, the employee’s injury has to occur as a result or in the course of his or her employment. For example, an injury sustained during the morning commute to work would likely not be covered, but an injury received while picking up lunch for a meeting may qualify. Some states may not require workers’ compensation for certain industries or certain size companies. If you do not have a workers’ compensation policy in place, however, your employees can then sue you directly for any injuries or illnesses.
If you want to protect your business from potentially costly lawsuits, having the right types of insurance policies in place is vital. Most companies generally carry at a minimum liability insurance, property insurance and workers’ compensation insurance. Liability insurance protects you from being sued for injuries that occur on your property or in the event one of your employees damages someone else’s property. Some types of companies may also need liability insurance in the form of auto policies or malpractice insurance. A property insurance policy covers your company’s real property, such as the building that houses your business and all of the equipment, supplies and inventory inside it. Lastly, workers’ compensation insurance protects you from being sued should one of your employees get hurt or develop an illness as a result of his or her employment.