You’ve worked hard to build up your business. From late nights and hard work to tackling significant self-doubt, it’s an understatement to say you’ve come a long way. That’s why you’re not about to let potential lawsuits stand between you and your entrepreneurial dreams.
Unfortunately, lawsuits can happen, even to the best of us. It’s easy to make a mistake when you’re tired, or make a decision when you don’t have all the information available. But as a small business owner, even the tiniest of errors could land you in legal hot water.
So what can help protect your small business from the kind of financial harm that could come from dealing with lawsuits? The solution might surprise you…
It’s business insurance.
Why business insurance protects your small business
Let’s say you’re a self-employed tax preparer. You pride yourself on your meticulous attention to detail, especially when it comes to helping clients make the most of their tax deductions. So when a customer accuses you of making an error on their tax return that caused them to get audited, you’re completely surprised. Before you know it, the customer is suing your business as a result of that single—yet costly—error.
Normally, you’d be required to pay your legal fees out-of-pocket, as well as pay out if there was a judgment made against you. But if you have business insurance—particularly errors & omissions coverage, in this scenario—your policy might pay some or all of those costs for you.
Business insurance is designed to provide your small business with multiple legal protections in the event things don’t exactly go according to plan. Whether a customer accidentally gets hurt in your office or you make an error within the course of your work, business insurance can provide you with an essential safety net.
Think of it as being similar to auto or home insurance; without it, you could be required to pay out-of-pocket for any accidents, claims, or lawsuits. And when you’re a small business owner, that “out-of-pocket payment” could end up shutting down your business for good.
If you want to protect your small business from going bankrupt as a result of a lawsuit, business insurance can make the essential difference between an event that is a minor blip on your business’s radar and a huge catastrophe that ruins your entrepreneurial dream.
Now that you know the importance of business insurance, what steps should you take to make sure you’re protected?
How to find the right policy for your business
Not all business insurance is the same. For example, if you own a restaurant, you’re not going to be buying the same policies as the person who owns a tax preparation business. And depending on how many employees you have and where you’re located, you might be legally required to have specific insurance coverages.
It can be a lot to handle, especially if you’re just starting out building your own business. Try using these tips to make sure you’re finding the right policy, so you can stay protected from potential financial damage that may come from resulting legal issues:
- Talk to people in your industry and see what kinds of insurance they have. This can give you a good start on what type of policies you should be looking at based on the trade you’re in.
- Reach out to state or national-level trade associations to see if they have any recommendations for you. Trade associations can be fantastic sources of information regarding what business insurance policies you should look into, especially if you don’t know anyone else in your industry.
- When you’re ready to buy your insurance coverage, set aside an hour or two to focus on exactly that. Gather up all the info you’ll need to answer essential questions about your business, like your employee count, your estimated revenue for the year, the specific services you provide, etc.
- Don’t settle for the first policy you find. In fact, we recommend shopping with a small business insurance brokerage that offers you a choice of multiple policies tailored to your exact business needs. It’s a great way to see exactly what you’re buying, as well as have greater control over your budget.
- Double-check that you’ve picked the right coverage for your business. Take a look at how much protection it provides you, how long the policy lasts for, and if it truly provides coverage for all of your services and potential exposures.
Business insurance can provide an essential layer of legal protection for your small business—don’t be caught without it!
Legal disclosure: Simply Business, Inc. is not a law firm and does not provide legal advice This article is intended to be used for informational purposes only and is not a substitute for obtaining professional legal advice.