4 Common Lawsuits Against Small Business

You’ve been extremely careful when it comes to your business. You abide by all policies and laws, take proper care to educate your employees, and doing whatever you can to keep your business space in tip-top shape. 

However, owning a business comes with risk; no matter how careful you are, you may find yourself on the receiving end of a lawsuit. Is there anything you can do to prevent liability claims? It may help to be aware of common lawsuits that occur, and which form of insurance will help you pay for legal expenses should a lawsuit arise. 

4 Common Lawsuits that Small Businesses Face:

  • 1. On-premise Injuries– It is quite possible for a third-party, such as a customer or client, to visit your business location and slip on a wet floor or trip over an out-of-place item. In these situations, you may have to cover their medical expenses, which can get very expensive. General liability insurance covers the medical bills and legal expenses incurred from a third-party injury on your business property. 
  • 2. Infringement of Intellectual Property– You may find a useful image online to use for your business, not knowing it has copyright. Or, maybe you come up with a design yourself, and another business claims that you stole the idea. Both of these scenarios could result in an infringement of intellectual property lawsuit. General liability insurance covers the legal expenses of an attorney to sort out these types of claims. 
  • 3. Defective Products– As a business owner, you likely do everything you can to ensure you sell the highest quality products. However, mistakes happen, and you will be responsible for the physical damage that your products cause. If medical attention is needed, you will have to pay for it. A product liability insurance policy pays for your attorney’s fees, the injured party’s medical expenses, and any other legal charges.
  • 4. Breach of Contract– When you sign a contract with another business, they’re entitled to the services you promised. If for any reason, your business fails to meet the contract’s expectations, they may file a lawsuit against you. A general liability insurance policy will pay your lawyer’s fees, other legal fees, and charges to help your business recover their losses.

Taking Preventative Action

With hard work and good luck, your business may never face any of the common lawsuits described above. However, all it takes is one mistake to sink your business if you can’t afford to defend yourself with an experienced lawyer or pay for the associated damages. 

What can you do to expect the unexpected and protect your business from liability claims? First, you can do your research when shopping around for business insurance. 

Make sure to thoroughly investigate your insurance carrier options. Before signing on to a policy, find out about each company’s reputation, financial strength, policies, and reviews. Once you narrow the playing field, request small business quotes from a few contending companies and perform an in-depth analysis of their rates. Also, don’t forget to compare the additional services and benefits that each provider brings to the table. For example, do they offer online payments, claim inquiries, 24/7 customer service, and policy changes?

What to Do Should a Lawsuit Arise

If you’re being sued, the first thing you should do is find a lawyer if you don’t already have one on a retainer. Be open and honest with them and let them guide you through the process. 

Apart from this, make sure that you aren’t in contact with the person who is suing you. Even if you may know them at a personal level, avoid any communication with them, because they may use it against you in court.

Plan Ahead with Proper Insurance Coverage

Insurance can go a long way to protect you, but only if you have the right type of coverage for your business. Apart from researching and purchasing the right policies, make sure that you are doing everything in your power to educate your employees and prevent lawsuits from arising. 

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