Running a business isn’t simply launching a product or service and watching the profits roll in. There is a lot that’s involved. You need to manage a staff, make sure that your day-to-day tasks are handled, network and monitor your books, plus about a million other things.
Along with all of these, you will have to protect your business from anything that might harm it. In many cases, the things you want to protect against are unpredictable. However, that doesn’t mean that you can’t prepare for them. That’s what having the right insurance will do.
It will provide coverage if something bad happens. No matter how diligent you are with precautions, and how good you are at your work, there are always bad things that can happen unexpectedly. Here are 6 situations in which liability insurance could save your business so show how important the right coverage is.
1. Data Breach
Nowadays we need to be more diligent than ever with data protection. Everything is stored digitally, which means that hackers can infiltrate it from anywhere in the world. Not only that, but more and more businesses collect customer data for use with targeted marketing and ease of future purchases. However, with so much data being stored in the cloud and on local hard drives, there are more opportunities for breaches.
A breach can happen because of nefarious actions, or it can happen due to an error by you or your staff. No matter how it happened, you may find your business in big trouble. For one, you may be facing lawsuits from any customers affected by the breach.
Plus, you will have to deal with the public relations fallout. With the right cyber liability insurance, you can have your legal costs and PR costs compensated so that your business does not end up in a deep financial hole.
2. Libel or Defamation
Unfortunately, someone can sue you for seemingly no reason at all. That means that you have to be extremely careful about everything you do. Let’s say for instance that your business runs some marketing copy that compares your products to a competitor.
They may find that you defamed or libeled them in some way, and bring a lawsuit against you. While this lawsuit will probably not succeed, you would still face massive legal bills simply fighting the case. With liability coverage, you can get funding for those costs so that you fight the case while still operating your business.
3. Professional Error
You may be the very best in the business at what you do. However, that doesn’t mean that you or an employee won’t make a mistake at some point. When you do, you could find yourself in legal trouble if a client feels they have suffered losses because of it. If you are a professional, such as a financial planner or an accountant, then you are relied on to provide accurate and beneficial financial information and forecasts.
If a client makes a decision based on your recommendations or forecasts that ends up being incorrect, they could sue you. With professional liability insurance, you will have coverage. You can learn more about how to get professional liability coverage here. Otherwise, you could be held responsible to cover their losses as well as court fees. That could be enough to seriously damage your small business.
4. Contractor Error
Let’s say for instance that you are contracted to renovate a beautiful ballroom. The clients ask that you have it finished in time so that they can hold a massive re-opening event that will bring in thousands of dollars and kickstart a marketing campaign.
You start work, however during the project you realize that you ordered the wrong materials for a certain aspect of it. At that point, you have to wait for the correct material, and remove what’s already been installed.
These delays cause the client to postpone the event and refund all of the tickets they’re sold. They can then sue you for your mistakes to recover their losses. Liability coverage will ensure that they receive the compensation they deserve, and your business does not suffer beyond some potentially bad press.
5. Medical Malpractice
As a doctor or a healthcare practitioner, you hold the lives of your patients and clients in your hands. Unfortunately, since you are human, you or your staff can make mistakes. When it comes to health clinics, this often means an issue with sanitization. It can be very hard to protect completely against infection.
It requires constant vigilance and strict adherence to policy. However, sometimes an infection can still slip through. If a client gets seriously sick or worse, they or their family may sue your clinic for medical malpractice. These cases can get up into millions of dollars, so you need protection to keep your business afloat.
6. Breach of Contract
A supposed beach of contact can be devastating for a business. For example, an architect may be contracted to design subcontract another company to construct a large building. If there are errors in the design of the building or in the construction, the architect and the subcontractor may be sued by the client.
This could happen if they feel that the design flaws have led to further costs, such as more repairs or issues with renting or selling the space. The flaws may also cause the building to run past its deadline, which could cause further financial difficulties for the client.
Repairs and financial losses related to some buildings can be massive, meaning the company may be on the hook for millions of dollars without professional liability insurance.
Insurance is a vital part of your business. Of course, you never want to have to use it, but you need to know that it’s there in case something bad happens. Unfortunately, there are many incidents that could ruin or seriously damage your business.
Professional liability can protect you against the financial burden that could result from errors and other unforeseen circumstances. If you are unsure if you need professional liability insurance, then check with your insurance provider to make sure you are properly protected.