What To Do If Your Small Business Gets Sued?

A lawsuit against your business is the last thing you want to hear. There are valuable costs associated with lawsuits, even frivolous ones, including money, time, reputation, and the stress they can cause. There have also been instances where a lawsuit has been detrimental to you, this is where you'll need small business general liability insurance coverage.

 

Can Your Company Get Sued?

 

There is no doubt that nobody wants to be sued. But, according to statistics, 36% to 56% of small businesses are involved in some type of litigation every year, and 90% of small businesses face a lawsuit at some point over the course of their operations.

 

There are a number of reasons why small businesses can get sued. It is possible for your company to end up in court as a result of bodily injury, personal and advertising injury, or property damage. Even the most cautious business owner can face a frivolous lawsuit.

 

But there's good news for your small business, general liability insurance can reduce the risk of facing a variety of potential lawsuits.

 

How To Handle A Lawsuit Against Your Business

 

If your company is sued, your initial response is probably going to be emotional. That is a typical reaction, and it's crucial to process your emotions. But the need to act quickly is much greater.

 

To begin the legal procedure on your end, read the following instructions listed below.

 

Step 1: Contact An Attorney To Discuss The Case

 

Review the lawsuit papers carefully with an experienced business lawyer as soon as you receive them. Ensure the lawsuit contains the correct entity or person associated with issues by reviewing the caption and service information.

 

Should this information be inaccurate in any way, you may seek to dismiss the case in its entirety. It is important to review the allegations and place a litigation hold, or preservation order, if it is true. Data that may be relevant to the legal proceedings must be preserved by your company.

 

It is important to note that you should not communicate directly with the plaintiff.

 

Step 2: Hire A Defense Attorney, Unless You Already Have One

 

It won't be necessary for you to take this additional step if your company has a lawyer on retainer or your insurance carrier provides one. However, depending on the complexity of the situation, you may need an attorney who specializes in the type of lawsuit received.

 

Step 3: Report The Complaint To Your Insurance Company

 

To protect companies against lawsuits, business insurance policies are available. General liability insurance includes third-party bodily injury claims, property damages, and defamatory remarks about competitors.

 

Aside from the general liability coverage, you may utilize additional insurance for your company. You may be covered by professional liability insurance if you are accused of causing a financial loss to a client. Employers' liability insurance and employment practices liability insurance cover employee lawsuits.

 

Once all of these are completed, you're given a deadline for responding in writing upon receiving the lawsuit. States have varying deadlines, but most fall within 30 days. Ensure that you follow all these steps within the given time period in order to prevent any further problems.

 

If a lawsuit is not responded to within the allotted deadline, the plaintiff may seek default after another 30-day period. In other words, the court may automatically rule in favor of the plaintiff to win the case, and any judgment against you will be enforced by the court.

 

What Is General Liability Insurance?

 

A general liability insurance policy protects businesses from a variety of potential lawsuits. It is sometimes referred to as business liability insurance or commercial general liability insurance.

 

As a result, you and your business are protected from financial liability if another person's property, body, or reputation is damaged.

 

The following are included in the coverage of general liability insurance—costs related to medical expenses, property damage, legal fees, attorney fees, and other expenses related to damages done during business operations.

 

By having this policy, small businesses will have financial protection from expensive lawsuits.

 

Is General Liability Insurance Required?

 

General liability insurance coverage is usually not required by state law for business owners. Still, keep in mind that understanding your state's insurance laws is still important. For some client contracts, leases, and mortgages your business may encounter, a general liability insurance policy is often required.

 

Despite this, getting general liability insurance coverage for your company is a smart investment for all types of businesses. This is especially useful for small business owners with a public storefront since they are prone to general liability claims.

 

How Does General Liability Insurance Help My Small Business?

 

By having general liability business insurance, you can grow your small business, build your reputation, and gain more customers.

 

Apart from this, you also need to insure your company against many things that could go wrong during normal business operations. For any business to succeed, having good insurance is essential.

 

There are already enough problems for your business without having to worry about what to do if an employee is injured on the job, or if a client's property is damaged or destroyed by accident.

 

When you have a solid sole proprietor insurance policy, you can focus on making your business flourish.