Why All Businesses Need More Than the Minimum Liability Insurance 

There is no doubt that we have become a litigious society. According to one source on civil law statistics, each year civil lawsuits cost our nation’s economy $239 billion, or $812 for each American citizen. Perhaps what is even more of a dangerous harbinger for small business owners is that nearly 80 percent of people believe that personal injury attorneys who advertise encourage those who have not truly been injured to sue.

Small businesses are not exempt.

Some businesses gamble that they are too small to sue, figuring that once a litigant realizes there are no deep pockets, they will move on to bigger fish. But that is not a wise move. Just the process of answering a lawsuit filed by a plaintiff requires hiring an attorney to handle the case. Even if the attorney is successful in getting a claim dismissed by filing a motion, attorneys’ fees and court costs mount quickly. If the case does not get dismissed quickly, depositions will need to be taken, discovery must be propounded and answered and witnesses have to be interviewed. A simple slip and fall case can cost an under- or uninsured business tens of thousands of dollars in legal fees alone.

Some business owners think, “But it’s just a snowball stand! I don’t make enough profit to get sued.” Sure you do. You have a business entity legally (it is hoped) selling a product to the public. If a child chips a tooth on some uncrushed ice, or a man stumbles over the pavers leading up to your snowball shack and breaks an ankle, you can be sued. Sure, the payoff may be minimal or even non-existent, but simply getting to that point is quite a costly endeavor that you should avoid at all costs.

Being underinsured can quickly lead to bankruptcy for a small business
Being underinsured can quickly lead to bankruptcy for a small business.

The problem of being underinsured

If you are feeling complacent because you purchased the minimum liability insurance, you’ve already started your descent down a slippery slope. While it could cover minor claims, what happens if something really serious befalls a customer on your property? What if a customer is shot and killed at your snowball stand while an armed robber is holding up the business? Or if a large limb from the shade tree the stand is built beneath comes crashing down on a child’s head, leaving them with catastrophic brain damage? There are an infinite number of ways that your business could be bankrupted through civil litigation due to being underinsured.

Keep in mind that no defendants in premises liability or personal injury cases ever say, “Gee, I wish I hadn’t carried so much insurance.” If you are even questioning whether the limits of your policy are sufficient to protect you in the event of a lawsuit, you need to contact your insurance agent today and review your policy limits. It is far better to carry more insurance than you will ever need than to see yourself headed to bankruptcy court due to litigation filed against your business.