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Top Tips for Limiting Lawsuits

Outlined below are just a few of the ways your business may be able to avoid, or at least minimize, the financial impact of expensive lawsuits.
  1. Include "hold harmless" clauses in your contracts.
    One very effective way to limit your liability is to transfer the risk to others through effective contracts and agreements. Specify what you're responsible for…and what is someone else's responsibility.

    Action Step: Transfer risk contractually, by writing "hold harmless" clauses into your agreements. These agreements specify that your company may not be held financially responsible for any damage caused by subcontractors you hire to provide services to your clients. Have your legal advisor review all "hold harmless" agreements prior to signing.

    Note: Although some states do not recognize legal transfer of all liability by contract, these agreements can still help define your financial responsibility.


  2. Carefully maintain your interior and exterior walkways.
    Icy parking lots. Cracked sidewalks. Slippery steps. Unlit hallways. Any of these seemingly minor conditions can trigger a major lawsuit…if someone is injured on your premises because you didn't properly maintain your facilities.

    Action Step: Focus on preventing accidents by standardizing and implementing regular procedures for maintaining your public areas. Make these areas safer by improving lighting.


  3. Make sure you have enough general liability insurance.
    So how much is enough? That depends on how likely your business is to be sued…which in turn depends on a whole host of factors such as what type of business you're in, how often you have visitors onsite, how frequently you make deliveries offsite, etc.

    Action Step: Consult a professional insurance agent, broker or risk manager who can help you assess your company's specific liability risks and determine how much insurance protection you need.


  4. Make sure you attend to potential "claimants" quickly.
    If your company or one of your employees damages someone's property or causes an injury, it's critical that you immediately address both the physical and psychological consequences.

    Action Step: Let the person know how concerned you are. Ensure that any injured person receives immediate medical attention if necessary. Follow up with all parties after the loss. The more seriously you take the situation from the beginning, the less serious it may become in the end. You'll also want to review this article for more tips on how to enhance the safety of your company visitors.


  5. Know what your liability policy does, and doesn't, cover.
    It's just as important that you know what your general liability insurance policy excludes as what it includes. Some policies exclude many risks, while others only include specifically named risks, both of which could you leave you dangerously underinsured.

    Action Step: Ask a professional agent to help you analyze your policy's exclusions. Consider purchasing additional liability policies to cover specific risks that aren't usually covered by general liability policies, such as auto liability claims, malpractice lawsuits, and personal claims against your directors and officers.


  6. Safeguard your visitors.
    Many liability claims arise when visitors are injured on your premises. So it's essential that you take steps to ensure their safety.

    Action Step: Establish a program to identify, and properly escort, all visitors to your facility. Keep visitors out of dangerous areas and away from machinery, vehicles, or hazardous materials.


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