Steps to getting protection from business lawsuits

Written By Steps To Faculty Published August 13th, 2010

Despite your best intention and effort to make your customers and suppliers happy, there is always going to be an ongoing risk of a lawsuit. If a customer feels cheated and misunderstood or a supplier feels shafted, then you may have a business lawsuit on your hands. Even if you are in a corporation or a limited liability corporation (LLC), which are both forms of business that reduce the manager’s exposure to liabilities such as lawsuits, you may be still feel the impact of a business lawsuit. Why? Because the cost of a lawsuit is huge and can run into the thousands of dollars not including the actual settlement. This is why you need to protect yourself and your business from any potential lawsuits. Here’s how.

Step 1 Get the facts from your agent

The first step you need to take is to determine what types of business liabilities could arise from your business or company and then assess the types of potential business lawsuits that can arise.

Step 2 Get business liability coverage

After speaking with your insurance broker, inquire about getting business liability coverage. This type of insurance does not protect you from actually being sued of course, but it does provide you with an attorney and personal guidance through the actual business lawsuit. Depending upon the amount of coverage, the insurance company can also arrange settlement up to a maximum amount in the event of a lawsuit. You will have to pay a deductible.

Step 3 Check your policy limit coverage

You need to have a sufficient amount of policy limit coverage (which depends upon the size of your business) since the name of your company and your name will be mentioned in the lawsuit. You want to avoid as much exposure as possible.

Step 4 Add a clause

If a mediation or arbitration clause does not already exist at the beginning of your contract with suppliers or special customers, then you should consider adding one in or amending your existing contract upon renewal. A mediation clause can save you millions should a lawsuit arise because it requires that you and the other party seek to resolve the differences through a mediator or arbitrator.

Step 5 Be clear

Another great step to take to protect yourself from a business lawsuit is to be clear about your policies and what you can deliver in a timely fashion.

Remember, it is better to be safe than sorry. Please visit stepsto.com for more great business advice.


Roger Due

Investing in Your Destiny® & Coaching Program - Wealth Building Summit Dallas, Texas

My name is Roger Due and I am from Albuquerque, New Mexico and I am the owner of the Monsano software company. This has been an absolutely fantastic conference. This is the best I have ever been to.