Liabilty Insurance
Liability Insurance: Think Beyond Frivolous Lawsuits
It is true that today’s culture has bred a litigious society. People can and will sue for everything and anything, even if it isn’t actually your fault. You can read about frivolous lawsuits every day.
Some of these cases are idiotic, many are obviously ignorant about the realities of running a business, and some are almost silly, but no matter how baseless a lawsuit is on the merits if the court issues a judgment against your business you could be out thousands or even millions of dollars in a true judicial massacre.
You need liability insurance to protect you from those sorts of miscarriages of justice where your company was not in any way at fault, but, even more importantly, you need good well thought out liability coverage for those times when it is your fault.
Nobody is perfect. That is a simple fact – not an excuse. Commentators often discuss frivolous lawsuits, but the truth is that courts have gotten a lot tougher on frivolous lawsuits in the last twenty years. Generally, frivolous lawsuits are no more than a hassle.
What you should lose sleep about if you don’t have liability coverage is that day when everything that can go wrong does go wrong. That’s what happened on the Titanic and that’s happened at Pearl Harbor and it can happen to your business. What’s the worst case scenario? Have you ever really thought about it?
Do you run a business where if one of your employees did not do their job correctly that a customer, or even worse a random citizen, could be maimed or even killed? How many times a day do your employees perform these potentially deadly tasks?
If you don’t have liability coverage you are trusting that those employees will do the job exactly right every single time? Do you trust your employees that much?
How Much Liability Insurance Do I Need?
The first question that many business owners have is what is liability insurance? It is not particularly complicated, but you do need to familiarize yourself with the various types of liability insurance available for the type of business you own.
However, before you decide on which type of policy to purchase you should examine your businesses liability very carefully, because in order to determine the type and amount of insurance you need to determine nature and seriousness of the risks you are buying insurance to protect against.
- How big is your business? It may not be fair, but the larger your operation the more insurance you need relative to your smaller competitors, because you are a bigger target and with more activities there is, all other things being equal, a higher chance of a disaster. Also, attorneys are more interested in going after a large company that appears to have the ability to pay than a small company that apparently has no other assets than a ’69 Chevy pick-up and two rolls of duct tape.
- How dangerous is your business? There are all sorts of liability, but none are more significant than the liability that occurs when an employee, customer, or member of the general public is killed or injured, because of the actions of you or your employees.
- How much can you mitigate your risk without closing your business? You should look at every job that you or your employees perform and see if there is a safer way to reach the same goal. Some risks cannot be avoided and some solutions are too expensive to implement, but occasionally you will discover an idea that both reduces your liability and increases your productivity. A good risk management consultant can help you search for these gems.
- How expensive do judgments tend to be in your business? This varies widely from industry to industry and a good insurance agent should be able to give you some direction.
- How much insurance can you afford? This is the basic issue of all insurance. No one can really afford to insure against all possible risk. The question is how to balance these competing needs of risk and the cost of protection. Although, insurance companies will toss out numbers and accountants, attorneys, and your dog are worth asking for an opinion, ultimately the decision is up to you.
There is no correct answer unless you don’t have enough liability coverage when you need it.
General Liability Insurance
General liability insurance is typically part of an insurance package. It provides coverage in the case of lawsuits due to bodily injuries incurred by customers, employees, or guests while on your property or property damage caused by you or your employees. General liability is by far the most common type of liability insurance, but there are four others that are more tailored to the specific needs of certain customers.
Professional Liability Insurance
Professional liability insurance is one of them. Professional liability protects professionals like doctors and lawyers from claims against them. One example of this type of liability is malpractice insurance. Doctors in particular can testify to the rising amount of lawsuits filed against their profession.
Product Liability Insurance
Product liability is another type of insurance that exists; its purpose is to protect businesses from claims on defective products they have manufactured. One famous example of this is the cigarette industry. Philip Morris is a major manufacturer of cigarettes, which aren’t defective but are widely known to be terrible for your health. From manufacturers of toys and baby products to car manufacturers, many have benefited from the protection of product liability.
Employment Practices Liability
The newest type of liability insurance is employment practices liability. This insurance protects employers from employees, former employees, and business associates who file claims against them regarding violations of legal rights. Lawsuits filed because of sexual harassment or discrimination have dramatically increased in the past decade, and have made this new type of insurance necessary. If you are a business owner and do not have some type of an employment practices insurance policy, it would be a good idea to look into it.
Directors and Officers Liability
The last type of liability insurance, directors and officers (D&O) liability, has recently become a major component of insurance within the corporate structure. An overwhelming majority of Fortune 500 companies keep D&O insurance due to the significant increase in lawsuits in the past few decades. Originally directors and officers liability was created to protect the heads of companies from personal financial ruin. These days D&O protects not only the directors and officers of a company, but the company itself from the many and sometimes rather frivolous lawsuits that are filed.
Insurance Questions:
Question on insurance to liability when driving a friend’s house drunk in his car?
My friend asked me driving his car to take him because he drank. I picked it up and on the way home came in a shootout in my fault. His confidence paid for damage caused to another vehicle, but did not complete coverage for his car and wants me to cover the $ 800 in damage to his vehicle. I do not feel responsible. I have a minimum coverage. Will he be able to sue me claims? Am I responsible for his damages?
You know, the answers above are referred truth, but off base. So the cops and insurance companies see it. The liability arises from the RCA, while the liability is the driver. So, if John is driving a car from Steve John and hits someone else, Steve auto insurance pays the damage, but John is the one who gets the ticket from the police, and John is the one who gets an extra “on his insurance because he was responsible for John to drive carefully. On the other hand, choosing not to have coverage complete his own car, it meant that your friend was assuming full responsibility for damage to his car if he hit someone else. If he wanted other people to drive his car around, they offer the same coverage, he gives himself. He should have taken cover complete so that if “damages another person’s car, it is covered (if he wanted compensation for those damages). I think in a court of justice, one could argue that point. Tell whoever – and tell him the next time he wants a car and drive sober in the morning, he better be its own designated driver, I do not think you can be held in damages, but it also depends on what state you live in.
RE: Massage Liability Insurance