Calling All Small Business Owners: Do You Have Insurance?


The vast majority of businesses in the United States are small businesses.  If things go well the business will grow in size and profits but there is an ever-increasing risk of legal and financial liability.  As a business owner you should be sure to protect your business, your family, and yourself.  One means of providing this protection is purchasing business insurance.   Business insurance is often referred to as commercial general liability coverage.

If you have business insurance you should take a few moments and familiarize yourself with the policy and the nature of your coverage.  One valuable feature of a business insurance policy is legal representation if the business is sued.  The policy also imposes an obligation on the insurance company to indemnify the insured.  Indemnification is a fancy legal term which essentially means payment of a settlement or judgment within the monetary limits of the insurance policy. 

Some commercial landlords or other owners of property leased for business purposes require businesses to obtain insurance.  Business insurance may be required for a business to place bids or otherwise obtain certain contracts (ex:  many government contracts require businesses/contractors to have insurance). 

Recently I consulted with a small business owner who was facing a rambling lawsuit which bore little—if any—relation to the services the business owner had provided the plaintiff.  But since the business was named as a defendant and the business owner had been served with the summons and lawsuit she had to do something.  During our consultation I asked if she had business insurance and she said “yes”.  Being tremendously organized she went to a drawer in her desk and had her business insurance policy at her fingertips in less than a minute.  Within the next two minutes she was on the phone with her agent notifying them of the lawsuit and taking the first steps in getting the help she needed to protect her business and fight the lawsuit.  The insurance company provided her legal counsel—and one of the best lawyers in town, might I add—which eliminated her need to pay me or another attorney a large hourly rate and/or retainer in this case.  I was quite happy to step aside as she was obviously in capable hands.

If you have business insurance be sure to notify your company immediately if you have been sued or receive notice of a potential lawsuit/claim.  And if you do not have business insurance you may want to consider if it is necessary to provide the peace of mind you so desperately need as a business owner.  I am not an insurance agent and I am not receiving any compensation for this post.  Instead I am offering a suggestion as an attorney who regularly handles cases involving small businesses.  As Michael Jordan said many years ago in those Hanes underwear commercials, you’ve been briefed.

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