Five Ways to Limit Lawsuits Against Your Company

 

How vulnerable is your company to lawsuits? More than you might imagine. Here are ways you can help avoid or minimize the financial impact of expensive lawsuits.

1. Include ‘hold harmless’ clauses in your contracts. One effective way to limit your liability is to transfer the risk to others through effective contracts and agreements. Specify what you’re responsible for and what is someone else’s responsibility. Transfer risk contractually by writing “hold harmless” clauses into your agreements. These agreements specify that your company may not be held financially responsible for any damage caused by subcontractors you hire to provide services to your clients.
2. Carefully maintain your interior and exterior walkways. Icy parking lots. Cracked sidewalks. Slippery bathroom floors. Dark hallways. Any of these can trigger a major lawsuit. Help prevent accidents by standardizing and implementing regular procedures for maintaining and improving your business safety inside and out.
3. Make sure you have enough general liability insurance. How much is enough? That depends on how likely your business is to be sued, which in turn depends on a whole host of factors such as what type of business you’re in, how often you have visitors on-site, how frequently you make deliveries off-site, etc. Consult your Insurance Advisor to help you assess your company’s specific liability risks and determine how much insurance protection you need. Be sure you understand what your liability policy does and doesn’t cover.
4. Safeguard your visitors. Many liability claims arise when visitors are injured on your premises. It’s essential you take steps to ensure their safety. Establish a program to identify and properly escort all visitors to and around your facility. Keep visitors out of dangerous areas and away from machinery, vehicles, or hazardous materials.
5. Incorporate your business. Insurance may give you some protection against loss. However, you may suffer business losses and lawsuits that may not be fully covered by your insurance. What then? An extra level of protection can be obtained by forming your own corporation. Even though incorporating yourself will result in extra paperwork and costs, it can be the most important thing you ever do for your business.