Liability risk management

Nearly every business should have some sort of business (sometimes called commercial) general liability insurance. However, how much liability insurance do you need? How much you need depends on your risk. Obviously, insurance is much more important to someone that owns a waterpark compared to a retail store. However, both need some type of insurance. You'll often hear about coverage in relation to "millions per incident." The lowest coverage recommended is often one million per incident, and it may cost you less than $1000 per year. If your business is in a high-risk industry, you may opt for more.

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In general, liability insurance helps minimize your losses if your company is sued (by non-employees). Your insurance may help you cover costs such as:

• Punitive damages
• Settlements
• Legal fees
• Compensatory damages
• Non-monetary losses
• Property damage (others)
• Libel and slander
• Third-party bodily injury
• Product liability

Carefully go through the details of insurance options before purchasing. Look for any shortages, possible loopholes, and exclusions. Consider additional types of insurances if needed, such as commercial property insurance, professional liability, workers compensation, and employment practices liability insurance.

There are many ways you can minimize risk in ways that do not require a large portion of your budget. You can reduce risk by:

Maintaining a safe work environment

Clearly mark dangerous areas, such as wet floors or work areas. Keep equipment in good working order. Follow all OSHA requirements. Keep all work areas clean and free of debris.

Training employees

You should provide safety training for new employees as well as ongoing training for current employees. Training materials should be readily available at all times for reference. You should use signage to remind your employees of safety expectations if needed.

Provide excellent customer service

Happy customers are less likely to take you to court over minor issues. They may also be more willing to sign a Release of Liability.

Improve your security

Increasing your security may cost a bit of money, and it is something that you likely should be doing anyway. Install automatic lights, security cameras, and keypad entry devices.

Release of Liability forms helps certain types of businesses protect themselves. If you operate a business that provides physical activities such as rock-climbing lessons, walking tours, or sports tournaments, you certainly should have the participants sign a Liability Waiver. A Release will not protect your business from everything, such as negligence, but it may protect you from something the participant does to injure themselves, such as hurting themselves while skiing outside of the clearly marked, roped-off areas.