Mitigating Risk: How to Prevent Liability Claims and Protect Your Business

Liability risks can be a threat to your business, and unfortunately, they are all around you. One bodily injury or property damage claim could turn into a high-priced lawsuit that could put you out of business.

While you can’t eliminate all risks, we’ll explain how to identify and mitigate them in various ways to prevent liability claims. We’ll also give you the inside scoop on various types of liability claims and how to prevent them.

Types of Liability Claims

The first step in preventing liability claims is understanding the types of issues a third party could allege as being neglectful, harmful, or wrongful.

The following list describes common commercial liability claims:

• Slip-and-fall injuries
• Bodily injury
• Property damage
• Product liability
• Copyright Infringement
• Libel or slander
• Non-owned auto damage or injuries

Commercial general liability insurance protects against these claims, but business owners shouldn’t rely on insurance alone to protect their businesses.

How to Prevent Liability Claims

Business owners must pull out all the stops to prevent liability claims in addition to having the appropriate types of commercial insurance in sufficient amounts. Many of the strategies are easy and inexpensive to implement.

We’ve listed 16 common strategies for preventing liability claims below:

1. Make sure contracts are detailed and clearly explain the scope of work to be performed. Contracts should always be in writing and include costs and deadlines.
2. Enlist the help of an attorney in crafting a hold harmless agreement for all written contracts.
3. Keep the lines of communication with clients open. Set clear expectations and responsibilities. Inform clients of potential obstacles or setbacks and provide them with frequent updates on progress.
4. Back up files and documents as you may need quick access to them in the event of a catastrophe such as a fire, hurricane, flood, or tornado.
5. Develop a disaster recovery plan so you can keep the business running if you experience a disaster to avoid breaching a contract or missing a deadline.
6. Be diligent about quality control whether you’re manufacturing products, managing projects, developing an app, or building your website.
7. Declutter your business and remove trip hazards. Keep walkways and exits clear of objects and debris to reduce slip-and-fall risks or other bodily injury risks.
8. Post safety signs strategically to inform visitors of potential hazards.
9. Maintain your property and take note of seasonal hazards such as clearing walkways and parking lots of ice and snow. Keep records of repairs and maintenance tasks.
10. Establish strict rules about what employees may or may not post on social media platforms and enforce them. Disrespectful, false, or misleading posts about a competitor, vendor, or other employee have the potential for a lawsuit over libel or slander.
11. Avoid the potential for an intellectual property lawsuit by not copying content, music, codes, or graphics.
12. Carefully design and test all products you manufacture and maintain meticulous records over their life cycle. Enclose directions for using products and label warnings clearly.
13. Establish a plan for product recalls and follow up on customer complaints.
14. Monitor the premises with surveillance cameras.
15. Provide training for employees on ethical conduct and expectations for customer service.
16. Focus on safety measures that prevent property damage claims such as employee job safety and proper use of tools and equipment. Conduct regular inspections of job sites and employees.

What’s at Stake for Businesses That Overlook Liability Risks

A liability claim means someone got hurt or someone’s property was damaged and a group or individual wants to hold your company liable for a loss. Beyond knowing that your company may be responsible for an injury or property damage, your business could experience one or more of the following issues:

• Costly lawsuits and financial devastation
• Reputational damage
• Loss of business
• Legal or regulatory risks
• Increases in insurance premiums

With so much at stake, you must be proactive and vigilant about preventing liability claims.

Protect Your Business With the Right Commercial Insurance

The first step in protecting your business with insurance is assessing the risks that are inherent in your business.

Choose an insurance agent who is familiar with your business or industry and work with your insurance agent to cover them with the right commercial insurance policies to fit your needs. Your insurance agent will also help you select the appropriate limits and coverages to mitigate risks. A qualified, experienced insurance agent will also assist your business with

Be responsive to your insurance agent at the time of your annual insurance review. Carve out time to meet with your agent at least annually and more often if necessary as your insurance needs may change over the course of the year. Anticipate any upcoming changes in the business that could increase or decrease your business’s risk profile and discuss them with your broker or agent.

To learn more about how to protect your business against liability and other claims, contact one of our insurance specialists at Leap Carpenter Kemps Insurance Agency today at 209-384-0727.