No one wants to get sued. Sadly, though, we live in a lawsuit-happy world, where people are eager to sue others for seemingly innocuous things. What happens if a guest is injured in your home or office by some freak accident? What if you are rear-ended while driving a rented car? Will you be at fault if a neighborhood kid pulls your cat’s tail and is subsequently bitten by your cat?
If you stop and think about it, it’s a wonder we get through daily life without being sued. In many situations, the “damage” is minor and can be settled between individuals without much fuss. In other situations, you may want to call on your insurance company for help. And the last thing you want to hear in that situation is “Sorry, your insurance plan doesn’t cover that.”
You are wise to be proactive and vigilant when choosing insurance policies, but it’s also impractical to buy every type of insurance under the sun in a futile attempt to keep yourself safe. Instead, learn what kinds of accidents are common in your industry and be sure your current insurance policy will pay for damages in those situations. If your current policy is lacking, you may need liability insurance. Otherwise, you could find yourself in financial straits, having to pay large lump-sum fees or even a long-term structured settlement out of pocket.
Have a Small Business? Make it an LLC
If you have a business, no matter how small, you must make it an LLC, or a Limited Liability Company. This simple action separates your personal assets from those of your business. If someone had a problem with your business, your business would be sued but not you personally. If, as a result of the lawsuit, creditors then need to collect money, your business would be in debt, but your personal assets would be safe. In other words, the creditors could not use your mortgage (for example) as collateral.
General Liability Insurance for Businesses
At the very least, all businesses should have general liability insurance. The insurance company will pay legal and medical fees (up to a point, as outlined in your specific policy) if you are sued.
Depending on your industry, you may be at greater risk of being sued than the average business. This will affect how much coverage you need, as well as your premiums. However, this also means that a liability insurance policy will be well worth it if you do end up being sued for damages because the insurance premiums are still likely to be far less than the court fees you would otherwise have to pay.
Business owners can typically get a bundle of liability and property insurance for a discounted rate under what’s known as a Business Owner’s Policy (BOP).
Product Liability Insurance
If you sell products that could cause someone harm, it’s a good idea to get this special insurance coverage. Some products are obvious: fireworks are dangerous and you should get product liability insurance to lower the costs of being sued when someone is injured by one. Other products are not so obvious: small children can choke on small parts, suffocate in bags used to wrap products, or even ingest something that isn’t meant to be eaten. Whatever product you manufacture, take steps to protect yourself from debilitating court costs.
Personal Liability Insurance
Given today’s litigious atmosphere, it’s wise to have personal liability insurance. This will protect you if you cause damage to another person or their property and are sued as a result. If you like to participate in extreme sports where the likelihood of injury is high, personal liability insurance is a good idea. If you’ve been known to get a little rowdy after so many drinks at the bar, might as well have personal liability insurance. If you have pets, get coverage in case they bite someone or cause someone to trip and fall. And if you’re generally accident-prone, get coverage ASAP, especially if you don’t have a lot of money saved up to pay your own way through a lawsuit.
The good news is that personal liability insurance is often bundled with other insurance policies, such as life insurance, auto insurance, and homeowner’s insurance. There is also something called personal umbrella liability insurance, which adds additional liability protection to all of your other policies, increasing the coverage.
When it comes to liability insurance, it’s better to be safe than sorry. For more information on what kind of policy is best for you, talk to a trusted insurance agent.
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