Over the last few decades, there has been a dramatic rise in litigation against businesses, whether it's large multi-national corporations or small businesses. However, larger companies have entire legal teams dedicated to protecting them in court, but small businesses generally have little to no resources available if they're facing a lawsuit.
In today's Aegis blog post, discover how much a single lawsuit can impact your business, the business insurance policies that can protect your company when facing lawsuits, and why your company should not pass up these critical policies.
How a Lawsuit Impacts Your Business
A lawsuit can be filed against your company for a variety of reasons, whether they're valid or not. Each year, thousands of companies across the country face claims such as:
• Negligence
• Wrongful termination
• Defective products
• Unsafe working conditions
• On-site injuries
• Harassment
• Breach of contract
• Discrimination
Your company needs to have the financial resources in place to cover costs associated with a lawsuit, since these can be substantial. For a single lawsuit, companies can expect to pay attorney fees, court costs, settlements, and judgements awarded by the court, and these can range from the thousands to millions of dollars.
In addition, a public lawsuit can quickly tarnish your company's reputation among the community and with customers. It is in your company's best interest to resolve litigation as soon as possible, since disputes and accusations can drive down revenue, impact the company's value or stock price, or even cause your business to close.
What Types of Insurance Can Help?
There are several important Business Insurance policies that offer financial resources in the event your company is facing a lawsuit from a third party or employee. Each of these policies cover different types of issues or claims, but all offer protection that can help your business avoid paying all lawsuit-related costs out-of-pocket.
General Liability coverage – This is one of the most common types of Business Insurance, and is carried by nearly all companies. This policy protects businesses from lawsuits stemming from third-party claims involving bodily injuries or property damage resulting from your operations, services, or products.
Professional Liability coverage – This policy, also known as Errors & Omissions coverage, protects your business against lawsuits claiming your company provided inaccurate professional advice or services. A lawsuit might charge your business with professional negligence, inaccurate advice, misrepresentation of services or expertise, or libel or slander against an individual or other business.
Employment Practices Liability coverage – When current or former employees file a lawsuit against their employer, an EPL policy works by protecting the company against their lawsuit. Their litigation may stem from unsafe working conditions, wrongful termination, harassment, or discrimination claims.
Directors & Officers coverage – When business executives or owners are sued for their actions on behalf of a company, a Directors & Officers policy protects their personal assets from being included as part of any damages or settlements. This coverage can help companies retain and protect their key leaders and owners when facing claims of errors, misleading public statements, or a breach of duties.
Why Your Business Needs These Policies
The Small Business Administration estimates that between 35% and 50% of all small businesses are sued every year, so the possibility of your business facing a lawsuit is very real. A single lawsuit can cost your business a significant amount of time and money while also damaging the image and reputation you've worked hard to build up.
Business Insurance policies provide your company with the financial resources to defend your business reputation against false accusations, or help your company quickly resolve and settle cases where your business was at fault.
Without these critical types of coverage, your company could see all its financial resources drained and assets sold to cover the cost of a judgement against your business, as well as attorney fees. The annual premiums for these policies are minimal compared to the out-of-pocket costs your business could face for handling litigation without them.
Aegis Insurance & Financial Services Can Protect Your Business
As a leading provider of reliable, top-quality Business Insurance policies, Aegis Insurance & Financial Services understands the unique insurance needs of companies across a wide spectrum of industries. Our team of Commercial Insurance agents can help you identify areas of risk and develop an insurance portfolio that offers a full range of protection from damages, losses, or lawsuits.
Aegis also offers customized insurance solutions tailored to specific industries, such as Restaurant Insurance, Retail Insurance, Contractor Insurance, Farm and Ranch Insurance, and more. Contact Aegis today at 713-850-7622 to learn more, or fill out our online form to request a free quote.