How to Protect Your Business from Lawsuits by Unhappy Customers

There is no such thing as perfection when it comes to customer relations, because neither a business nor its customers are perfect. Most of the time situations get resolved without huge backlash, however. In the rare cases they don’t, and suddenly there’s a lawsuit in front of you, what can you do? How can you properly protect your business?

Buy Insurance Coverage

What kind of business insurances you need depends upon your type of business. Some need insurance only for themselves and their own liability. Others also need insurance for business vehicles, to make sure that no damage comes to them, or property insurance. Often you need insurance for your products and equipment. If you have workers, you’ll need worker’s compensation insurance as well. But when it comes to lawsuits, you’re best off protecting yourself with general liability insurance–this can help pay for the cost of lawsuits and mitigate the damages. 

Put it in Writing

Having a written agreement with your clients or customers can help you considerably should they refuse at any time to pay, or if you have to prove that you have fulfilled the requirements set forth in the contract. Agreements can also help you when you’re working under other contractors. As a subcontractor, you have different rights for coverage than if you were the primary contractor, so having all of this documented and written down will provide evidence in your favor if you’re being accused otherwise.

Consider an LLC

Using a Limited Liability Format for your company separates out your assets from those of your business. This potentially can protect all of your personal assets, such as your home and car, if a disaster does strike your business itself. There are limitations to what an LLC can do, but they are relatively easy to establish, inexpensive, and possible to keep those business and personal things separated healthily. Your goal is to make sure that your business can take care of itself, and not infringe upon your personal life. While you intend to be honorable in your business dealings, this way, should disaster befall, you are protected regardless.

It’s not terribly difficult to protect yourself from disaster when it comes to running a small business. Do your honorable work, and make sure subcontractors do the same. Get your contract and important agreements in writing, and keep your own assets out of it!

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