Running a business today means exposing yourself to certain risks and challenge that you might or might not be prepared for. It is a good way to test yourself unless you come across a win or lose everything scenario. And this is what small business lawsuits can bring to the table. They present the thin line between success and failure of a growing company. So, let us explore the more common lawsuits, as well as the means to protect your business against them.
5 small business lawsuits you should prepare for
Running a small business is not all money and smooth sailing. In fact, starting a small business comes with its fair share of complications and risks. And even though there is never a guarantee that you will succeed in your endeavor, most are prepared for such a scenario. However, what most small businesses (moving companies included) are not ready for are potentially harmful lawsuits against them. And the reality tells us that this happens more often than you might know.
The worst thing about lawsuits is that the financial impact of them can bring down an entire business. The larger and longer the lawsuit, the higher the lawyer fees get. And as those number rise in time, so does your company budget become depleted. The next thing you know – you’re taking out debts. Finally, you hit a brick wall – bankruptcy.
However, there is a solution for all of this. By following moving industry news and taking precautions, you can save a whole lot of grief later on. One such measure is preparing a good small business insurance plan. But before you start looking into insurance, you might as well learn what to insure against. Know your enemy before you do battle with it. Hence, here are five small business lawsuits that have ruined many companies in the past:
#1: Third-party work injuries
If a client were to get injured in your place of business due to negligence that could be signed over to you as a business owner, you would have to cover their medical expenses. Be it a banana peel or slippery floors or bad installations – they could blame you for any injury that they sustain. And based on the severity of the injury, your company might be forced to pay for:
- Medical bills
- Physical therapy/rehabilitation costs
- Lost wages while they’re out recovering
These types of small business lawsuits can escalate quickly, which is why you need to obtain general liability insurance. With this precaution, you can cover any third-party related injuries.
#2: Employee injuries
When your job entails physical labor, occupational injuries can run up quite the price. And in the moving industry, accidents are often unpredictable, even if you take all necessary precautions to avoid them. So, in cases where employees suffer injuries, the proper business-owner mindset is to have workers’ compensation insurance in place. This way, you can cover any employee medical expenses and partially lost wages.
Most states make it mandatory for companies to purchase this policy with every new hire. And if your state does not make you do this, it doesn’t mean that you shouldn’t. In fact, it is advisable that you protect both your business operations and employees from harm with this coverage. Otherwise, you might be looking at small business lawsuits from injured employees.
3. Harmful services
It doesn’t matter which role you have in business – moving broker, moving services provider or supplier – everyone can be sued. If your negligence in any way leads to physical harm, be it to a person or their belongings, you can be held responsible. Perhaps it was a flawed cardboard box, or a team of inexperienced piano movers, or a recommendation of a fraudulent moving company…
The only thing that matter is that you procure product liability insurance. This is typically included in liability policies, and it can end up paying for any defective-product-related claims.
#4: Nothing like a breach of contract to invite small business lawsuits
This is lawsuit evasion 101. If you sign a contract with a client, offering moving and storage services, you have to make good on everything stated in the contract. Otherwise, the client has the right to prosecute you with a lawsuit. The most common breaches include:
- Work delays
- Partial delivery of services promised
- Failing to meet the pre-determined contract terms
- Failing to complete the entire project etc.
You can call on professional liability insurance when it comes to professional errors. However, breach of contract is not necessarily covered by this. It varies from carrier to carrier. So, the smart call might be to consult with an insurance agency and get confirmation regarding this particular matter.
#5: Discrimination and wrongful termination
This group of small business lawsuits has slowly grown into the most dangerous ones you can experience. The world today is a fragile place, especially in the workplace. Hence, people can often face discrimination based on their:
- National origin
- Pregnancy etc.
According to federal law, any sort of discrimination in the workplace is strictly prohibited. Whether it’s an employee that was racially insulted or a supervisor insulting an employee, business owners have the job to mitigate such occurrences. And even if you manage to smooth things out, the employee can still file a lawsuit against you. In fact, this can also extend to job applicants during interviews. So, even potential employees can complain – remember that.
The solution here lies in well-organized HR departments. By paying for legal costs associated with discrimination and wrongful termination lawsuits, you can put employment practices liability into effect.
How can you protect your company against small business lawsuits?
There are simply things you can never predict. But you can make sure that you are protected in all known scenarios. By securing the right type of coverage and doing your research about them, you can easily mitigate costs in case a lawsuit were to occur.