We are guilty until proven innocent

Did you know that lawsuits and the fear of getting sued cost small businesses in the U.S. $98 million in 2005? That statistic comes from the U.S. Chamber Institute for Legal Reform. It includes money spent on:

• damage awards
• settlements
• legal costs
• liability insurance premiums
• costs incurred by insurance companies on behalf of policyholders

That same study reported that the fear of lawsuits is affecting decisions made by business owners. How?

• 48% of small businesses are concerned about frivolous and unfair lawsuits
• 46% have been threatened with a lawsuit
• 34% have been sued in the past 10 years
• 62% have made business decisions to avoid lawsuits

As a business owner, are you willing to take a chance with percentages?

I know if I owned a business it would help to know if my defense costs were outside my limits of insurance coverage. What good is $500,000 in coverage if my defense is costing $300,000? I know we all have an attorney as a friend, but do you know one who really wants to work for free?

I started by saying we are guilty until proven innocent. Why? Because you can be accused of doing just about anything - and until you prove your innocence you are guilty by being accused.

By purchasing an umbrella policy you are possibly picking up broader coverages and elminating some possible headaches. Unless you have this conversation with your insurance agent, you might have gaps in your protection. You might find out you're in need of professional liability or director's and officer's insurance.

Comments

[Adam Steen]

I just purchased an umbrella policy last year. It was $130/year and I haven't looked back. I'm much more comfortable knowing I'm covered.

I've heard some horror stories of those who didn't have the proper coverage.

[Rush Nigut]

Brian:

I don't disagree that an umbrella policy is a good idea. I have one myself. Not all umbrella policies are the same. They differ in coverage, definitions, scope and features. Some umbrella coverages may have exclusions that do not provide coverage in connection with a business, occupation, trade or profession. It is a good idea to read the policy carefully to understand what is covered and what is not. Sometimes business owners automatically assume they are covered for all situations with their umbrella policies. That is not always the case and you may end up with business owners that have the false sense they are covered.

Rush