Here are just a few ways of protecting
yourself against catastrophic losses and
lawsuits.
- Obtain Adequate Insurance Coverage
If someone slips on the sidewalk of your
home and injures himself, he could sue you
for damages. Your tenant`s or homeowner`s
policy may cover you for liability in such
an event.
However, what if it is your customer who
falls on his way to visiting your home-based
business? You will need an extra rider on
your house insurance to cover such
incidental business use. The extra charge
for this additional coverage is well worth
it.
If you use a car for business use, insure
it for such. Some people think that they are
being clever writing off automobile expenses
for income tax purposes but at the same time
not informing the insurance company that the
car is being used for business.
This is false economy. If you ever get
into an accident, police and insurance
investigators will certainly find out that
you used the vehicle for business purposes.
If you`re not paying for business coverage,
why would the insurance company cover your
claim?
As well, what do you think an income tax
auditor would think of your claimed business
expenses on the vehicle when your insurance
policy indicates personal coverage only?
Avoid this additional exposure to tax
liability.
Be sure to obtain required workers`
compensation coverage. Some have been held
responsible for all the medical and other
expenses of an injured worker, as well as
fines for non-compliance to the law. These
costs can be quite substantial and even
bankrupt you.
Consider obtaining product liability
insurance. This applies not just for any
products you manufacture but also for
products you sell that are made by
others.
- Incorporate Your Business
Insurance may give you some protection
against loss. However, you may suffer
business losses and lawsuits that may not be
covered by your insurance fully. What then?
An extra level of protection can be
obtained by forming your own corporation.
Even though incorporating yourself will
result in extra paperwork and costs, it
could be the best insurance you ever bought.
This is because the corporation is a
seperate legal entity or person. Even though
you may own the corporation, if the
corporation operates the business, it is the
corporation that will be sued or suffer loss.
If, for example, the corporation had
severe business losses resulting in debts
that could not be repaid, the corporation
would be insolvent. You, as a shareholder,
would lose your investment in the company
but would generally not be responsible for
any of its debts. Thus, you would not have
to sell your home or other personal assets
to cover the corporation`s liabilities.
On the other hand, there are cases where
directors of a corporation can be held
responsible for liabilities if they didn`t
act responsibly. You can`t hide behind a
corporation, commit criminal acts and expect
to escape accountability. For more
information about incorporation, visit: yenomarketinginc.com
- Protect Yourself With Legal
Agreements
Properly drafted written agreements can
protect you in many ways. First of all, they
can sometimes prevent misunderstandings that
can lead to legal problems. Secondly, they
may limit your exposure to lawsuits and
losses.
Contracts can limit your exposure to
liability by including provisions
restricting the scope of your work and
responsibility, having disputes handled by
arbitration rather than through the Courts,
and specifying that the maximum damages
payable shall not exceed the amount of the
contract.
A special area to watch out for is the
Internet. There are many laws that impact on
websites including matters affecting
children, privacy, earnings claims, and
unsolicited e-mail ("spam"). Certain
agreements and notices on your website may
help to protect you. For more information
about Internet law, visit yenomarketinginc.com
Protect yourself from catastrophic losses
and lawsuits. Take steps today to protect
your assets by limiting your exposure to
liability.
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About the Author:
J. Stephen Pope, President of Pope
Consulting Inc., pope
consultinginc.com has been helping
clients to earn maximum business profits for
over twenty-five years.
