Business Liability Spotlight: 5 Reasons You Could Be Sued | Heffernan Insurance Brokers

 

Business Liability Spotlight: 5 Reasons You Could Be Sued

February 08, 2017

As any entrepreneur knows, running a business is a high-risk proposition. Regardless of what industry you’re in or how careful you are in your everyday operations, there’s always the possibility that something will go wrong – a quarrel with an angry customer, a dispute with a vendor or business partner, an inadvertent labor law violation, a slip and fall resulting in an injury, or any one of a thousand other scenarios.

With each possible scenario comes another possibility – the chance you’ll get sued. That’s not a place you want to be because getting caught up in a lawsuit can drain your bottom line, your energy, and your ability to keep up your daily operations.

Fortunately, there are many things you can do to reduce the chances of being sued. The first step? Be aware of your vulnerabilities. Here are five of the top reasons your business could end up in the crosshairs of a lawsuit:

  1. Making promises you can’t keep. Many businesses make impossible claims, such as a burger joint claiming to have the world’s greatest hamburgers. Nobody takes those kinds of claims seriously. But be cautious about specific claims you make about your products or services, and make sure you can deliver on your promises. It’s better to make promises you can keep, and then over deliver. Customers are happy if they get value, and the more they spend on your product or service, the more that holds true.
  2. Failing to have an Employee Handbook. If you don’t have an employee handbook, you’re practically begging for a lawsuit. It’s the main communication tool for informing employees of company policies and procedures. Without one, you’re inviting a host of misunderstandings and legal issues, especially when it comes to employment and wage laws.
  3. Violating employment and/or wage laws. There are seemingly endless ways you can get sued under employment and wage laws, whether it’s for discrimination, harassment, wrongful termination, or some other alleged violation. This is where some of the biggest and costliest lawsuits happen, so it’s in your best interest to fully understand the laws and have a good lawyer on speed dial.
  4. Neglecting the housekeeping. It happens all the time – a customer slips on a wet floor or trips over an obstacle, falls, and gets injured. The customer ends up in the hospital racking up medical bills and talking to her lawyer about how much to sue you for. Even if the injury and the claim are exaggerated, it’s still going to cost you to defend the suit. Keep your place of business impeccably clean, neat, and tidy, inside and out, and eliminate as many hazards as possible.
  5. Breaching a fiduciary duty. If you’re an officer or director of a corporation, you have a fiduciary duty to act in the best interests of the company’s shareholders. If you’re an employer offering a company sponsored health benefits plan, you may also have a fiduciary duty to those enrolled in the plan. One sure way to invite a lawsuit is to violate those fiduciary duties, and that can get costly since fiduciaries can be held personally liable for damages incurred by those they’re responsible to.

While these five scenarios certainly don’t represent all the ways your business can be sued, they cover a lot of ground and account for the lion’s share of lawsuits brought against businesses.

Will you be protected if it happens to you?

Most, if not all, of these suits may be covered by insurance – but only if you have the right insurance. To find out if your business is covered for these risks, contact the risk management professionals at Heffernan Insurance Brokers today.