You have done a lot to build your business over the years. You probably have also worked to put away a decent amount of money as a security cushion. However, running the business is always going to cost you, and unexpected costs could easily cause a financial strain. One of the most devastating of these could be the costs of a lawsuit. Here’s why legal action could cost you more than just money in the bank, and a bit of what you can do about it.
Your Business’s Legal Liability to Others
Clients expect businesses to provide them with excellent goods and services. Should something accidentally go wrong, they might try to sue you for your losses.
Lawsuits are nothing to take lightly. First, they could result in significant legal fees. You might have to hire a lawyer, and cover your court costs. Furthermore, lawsuits could result in settlements, either levied by a judge, or reached between the two parties.
Either way, lawsuits might cost a lot of money. For example, a lawsuit against your business for breach of contract might cost, on average, $91,000. A lawsuit involving a customer’s slip-and-fall injury might cost $50,000, and the average judgement in these cases is $100,000.
One hundred thousand dollars is a lot of money no matter which way you cut the pie. If you don’t have this money, then the cost could easily devastate your business. Your financial assets could take a massive hit. Also, if you fail to make the necessary payments, then you might have to surrender physical assets, even the business itself. This is a disaster that no business owner wants to face.
The Benefit of Liability Insurance
Rather than wonder whether you can afford to defend your business against a lawsuit, get liability insurance. It can cover the costs of harm you do to other parties. It can also cover your legal fees.
Liability insurance comes in many shapes and sizes. Most businesses start their coverage with general liability insurance. It can cover the costs of bodily injuries or property damage that you cause to others.
However, you’ll also likely need to expand this coverage with numerous specialty liability policies, like errors & omissions insurance coverage. It pays in cases where your clients allege that your advice or errors caused them harm. Other beneficial coverage might include directors & officers coverage, which can help business owners protect their personal assets in case of a lawsuit against the business.
As much as you might try to avoid mistakes or accidents, they can happen at any moment. So, it is always better to have a plethora of liability policies at your fingertips, rather than take guesses if problems ever do develop. Contact us to get a Boise business insurance quote today.
FAQ’s About Will I Lose Everything if my Business Gets Sued?
What should I do if my business is sued?
If your business is sued, it’s important to seek legal counsel immediately to understand your options and develop a strategic response.
Can I lose everything if my business gets sued?
Depending on the outcome of the lawsuit and your business structure, you could be at risk of losing personal assets. Seeking legal advice is crucial to protect your interests.
How can I protect my business from lawsuits?
Implementing risk management strategies, obtaining appropriate insurance coverage, and maintaining legal compliance can help mitigate the risk of lawsuits.
What types of insurance can protect my business from lawsuits?
General liability insurance, professional liability insurance, and commercial property insurance are common types of coverage that can provide protection in the event of a lawsuit.
What legal responsibilities do I have as a business owner to avoid lawsuits?
As a business owner, it’s important to understand and comply with relevant laws and regulations, maintain a safe environment, and fulfill contractual obligations to minimize the risk of lawsuits.
Can a lawsuit against my business affect my personal assets?
Depending on your business structure, personal assets may be at risk if your business is sued. Seeking legal advice can help you understand and address this potential risk.
What steps should I take to prepare for potential lawsuits against my business?
Developing a comprehensive risk management plan, maintaining accurate records, and obtaining appropriate insurance coverage are essential steps to prepare for potential lawsuits.
How can I handle customer complaints to avoid lawsuits?
Promptly addressing customer complaints, providing clear communication, and offering fair resolutions can help prevent escalated disputes that may lead to lawsuits.
Can business insurance help cover legal expenses in a lawsuit?
Yes, certain types of business insurance, such as general liability and professional liability insurance, can help cover legal expenses associated with lawsuits.
What should I consider when choosing a legal representation for my business in a lawsuit?
When selecting legal representation, consider the attorney’s experience in business litigation, communication style, and track record of successful outcomes in similar cases.
Can you sell a business with a pending lawsuit?
Yes, you can sell a business with a pending lawsuit. However, it is important to disclose the pending lawsuit to potential buyers. Failure to disclose the lawsuit can lead to legal liabilities and financial damages.
If someone sues you, can they take your house?
It depends on the circumstances of the lawsuit and the laws of the state in which you reside. In some states, homestead exemptions protect a certain amount of equity in your primary residence from being seized to satisfy a judgment. However, if you have significant equity in your home, it may be at risk if you lose a lawsuit. It is important to consult with a qualified attorney to understand your legal rights and protections in the event of a lawsuit.