As a business owner you face a great deal of risks on a daily basis. This statement holds particularly true in the current situation that we are all dealing with. However, what would happen if you were sued? At first you may go into denial and think that there is absolutely no reason for someone to sue you. While this may be true, we do live in an extremely litigious world. That means anyone can sue you at anytime and for any reason. In fact, small business owners are sued all the time for both legitimate and unfounded reasons.
In essence, you may very well find yourself in the middle of a lawsuit even if it is a frivolous one. It goes without saying that any lawsuit can cause an enormous amount of stress. Some may even lead to financial disaster, even if you did absolutely nothing wrong. The good news is that asset protection planning goes a long way in mitigating the impact of any lawsuit. So what exactly is asset protection planning? By definition it is a “pre-litigation risk management tool that is intended to both deter and discourage lawsuits from occurring.”
If that is not possible, asset protection planning seeks to get your creditor to agree to a settlement that you find favorable. It should leave them with less they sought to get. A great deal of entrepreneurs are focused on the bigger picture. i.e. running their companies in a profitable manner now and in the future. That being stated, you must also take the proper steps in order to protect your assets from the negative implications of litigation. The best way to prevent a lawsuit from ruining your business is by having a liability insurance policy in place that fully covers you from a financial standpoint.
In fact, liability insurance is the most cost effective form of asset protection for both you and your business. Although business owners may have a liability insurance policy, they may not have the correct kind or the proper amount in place. This happens on a frequent basis because liability insurance certainly is not something that the vast majority of business owners pay attention to. In essence, they take out a policy, check it off the to do list, and move on to other things.
Many business owners take out commercial liability policies, yet they fail to fully realize that their business can be ruined if they are involved in a personal lawsuit. A simple umbrella policy covers both yourself and your business. In essence, it is an inexpensive way to cover your business assets and your personal assets in the event that you are sued. It is unfortunately that a plethora of business owners, particularly incredibly successful ones, are either underinsured, or their policies do not cover them in a sufficient manner.
Some insurance companies maximize the amount of coverage for their umbrella policies at $5 million. That means if your net worth, including your ownership share of the business, is over $5 million you may be at serious risk and should consult with an experienced insurance agency that specializes in liability insurance for business owners.
In conclusion, it is important to fully understand exactly what you are buying when it comes to insurance policies. If you have any questions, please call (508) 831-0133 to contact an associate at Zawada Insurance. We are happy to walk you through the details of your insurance policies and explain your coverage options. We look forward to helping you with all of your personal and or business related insurance needs now and in the future.