Protecting Your Business from a Lawsuit
Protecting your business from a lawsuit is essential to ensuring the long-term success of your company and propelling it to the next level. As a business owner, you must do everything possible to protect your company, limit risk, and keep things running smoothly. However, some events are beyond your control, one of which is the threat of being sued. It is why it is a good idea to have commercial umbrella insurance.
What are the Most Common Types of Lawsuits that Businesses Face
According to Forbes, 36% to 53% of small businesses face a lawsuit annually. Likewise, 90% of all companies are involved in litigation at any time. Every year, more than 100 million cases are filed in state trial courts and 400,000 in federal courts. Furthermore, civil case filings in U.S. district courts increased by 16% in 2020.
The Lawsuits that Businesses Face
A business can face a few lawsuits, and it is essential to know the differences.
Breach of Contract
Businesses face the most common type of legal action. A contract breach occurs when one party to a binding agreement fails to deliver on the terms of the agreement.
Product Liability
This legal action refers to a manufacturer’s or seller’s legal obligation to compensate buyers, users, and bystanders for damages or injuries sustained.
Employee and Customers Discrimination
Customers and employees are within their rights to sue a business for discrimination. They may file suit against companies that refuse to serve or treat them appropriately because of their religion, gender, age, sexual orientation, disability, or pregnancy.
Worker Harassment and Social Harassment
A suit may be filed for any physical or verbal behavior that makes a person feel uncomfortable, humiliated, or mentally affected.
Intellectual Property Theft
If your company name or logo is already in use by another firm, you may be subject to a wrongful use lawsuit.
How do Lawsuits Affect Your Business?
Business litigation is usually detrimental to both parties. Regardless of who “wins”, it could harm reputations and affect profits.
Lawsuits can also be time-consuming and affect a company’s relationships with its customers, business partners, suppliers, shareholders, investors, and other stakeholders. These issues could eventually result in the business’s failure, especially for small enterprises.
Lawsuits alleging fraud, discrimination, and other adverse actions can damage a company’s public image. In some cases, it could even severely affect marketing and sales.
How Can You Protect your Business and Avoid Lawsuits?
No owner ever wants to discover that their company is facing litigation. Apart from their cost in terms of time, money, and reputation, lawsuits are also very stressful. You can reduce the potential risk with these tips.
Avoid Employment Discrimination and Labor Lawsuits
Employee discrimination and illegal termination are two of the most common lawsuits against small businesses. Hire a reputable lawyer to help protect your company from legal actions and an HR consultant to educate you on state and federal law.
Boost Your Data Privacy and Cybersecurity
Tightening your cybersecurity protects your data from theft and damage. Consider investing in cyber insurance, limiting account access, and backing up your files. Maintaining customer, employee, and business confidentiality are other ways to protect your digital privacy.
Ensure That Your Contracts Have Proper Wording
A well-drafted contract could help you avoid contract disputes and litigation. It could also prevent communication and agreement misinterpretation.
Obtain Business Lawsuit Insurance
Commercial umbrella insurance can help cover the costs of lawsuits, legal defense, and any damages you incur. Companies working in industries where litigation is a common threat should focus on getting the appropriate insurance coverage.
About Daniels Insurance, Inc.
At Daniels Insurance, Inc., we have a unique understanding of the risks that businesses like yours face on a regular basis. With the backing of our comprehensive coverages and our dedication to customer service and quick claims resolution, your business will be fully protected. For more information, contact us today at (855) 565-7616.