/ BLOG

5 Business Practices That Increase Liability Exposure

Nov 30, 2022 · 6 minutes to read

Business owners analyzing documents

Every small business is unique, with its own set of business risk exposures. Taking steps to limit your liability exposures helps you protect your business, financial standing, and reputation. But sometimes, how you’re doing business may be what’s creating a problem to begin with. You may need to review and improve your business practices to help limit some business risk exposures.

Here are five business practices that may increase your liability exposure and practical steps to help improve them.

1. Working outside your specialty

Clients hire professional service providers for their skills and expertise. But just because you’re an expert in one area of your field doesn’t mean you’re able to take on every job that comes your way. Accepting work outside your specialty could create professional liability risks for your small business.

What can you do?

Referring clients to someone who is trained to do the job may be a wiser move than doing the work yourself and hoping for the best. Building partnerships with professionals in your field or closely related ones helps you provide trusted referrals—and could bring some your way as well!

Small business owners may also find themselves working outside their specialty when it comes to required business admin. The day-to-day tasks of running a business—from accounting to advertising—is essential, but they might be outside your area of expertise. Mistakes in these areas could hurt your clients and your business.

What can you do?

Consider outsourcing some admin tasks to pros. For example, a bookkeeper to help you balance your books or a web designer to build and update your business website.

2. Using inadequate contracts

Drafting contracts is part of doing business for many companies. These documents can keep everyone on the same page and help ensure that work is delivered as promised. However, the wrong wording might spell trouble for a project. It’s not uncommon for small businesses to pull contract templates from the internet, thinking a “one-size-fits-all” option will be fine. But depending on your industry, this could leave you open to liability exposures.

What can you do?

Consider seeking assistance from a local attorney when writing business contracts. They can help you draft a template that fits your business’ specific needs and the unique risks of your work.

3. Procrastinating on repairs

A cracked tile here, a leaking pipe there… these may seem more like nuisances than serious risks to your business. You might be tempted to put off repairs to save money or simply because you don’t have the time to address them right now. However, even minor issues could be general liability exposures for your small business—that cracked tile might not seem so small when a customer trips on it, and you’re responsible for their medical bills!

What can you do?

Take care of general liability exposures as soon as possible. If repairs must be delayed, mark the area with warning signs to help alert people of the risk. You may also consider regularly assessing your business premises (such as once a month) for risk exposures that can be fixed before they can cause you grief.

4. Ignoring complaints

Complaints are part of doing business, and you may just want to ignore them. However, hoping they go away is usually not the best policy. An unhappy client may do more than just leave you a poor online review. If they’re dissatisfied enough, they could raise a negligence lawsuit against you. These can be expensive to defend yourself against, even if the allegations being made are untrue.

What can you do?

Treat every complaint as a chance to learn and improve business practices within your company. Document the issue, investigate it and determine what steps (if any) can be taken to fix the situation. Complaints can often help you find business risk exposures you didn’t know you had.

5. Not having insurance

As a small business owner, you’re responsible if something goes wrong. That often means dipping into your bank account to compensate your clients for mistakes, property damage, injuries, and other incidents. Without insurance, your funds could quickly be exhausted, and your business closed for good.

What can you do?

Consider different types of business insurance to help limit your liability exposures. Professional Liability insurance (also known as Errors and Omissions insurance) is a popular choice for businesses that offer professional services. General Liability insurance is essential if you regularly meet with clients face-to-face at your business premises or theirs.

If you do have business insurance in place, you may want to make a habit of reviewing your coverage. Some clients may require you to have minimum levels of coverage to do business with them. Not meeting this obligation could be considered a breach of contract.

What can you do?

Set aside time to review your insurance coverage on a regular basis (such as quarterly or yearly) to check that you are meeting your contractual agreements. This could include client contracts, as well as commercial leases or industry licensing requirements.

Reduce your liability exposure

Handling risks is part of running any small business. Taking steps to reduce these exposures can help you keep your clients happy, protect your cash flow, and keep everything running smoothly. By taking risks seriously and finding ways to improve your business practices, your business could be here for the long run!

Looking for General Liability or Professional Liability insurance or Errors and Omissions insurance? BizInsure is here to help. Compare online quotes and get instant coverage in minutes. Start now!

As with any insurance, coverage will be subject to the terms, conditions and exclusions contained in the policy wording. The information contained on this guide is general only and should not be relied upon as advice.
The number of quotes provided varies between products, occupations and other underwriting factors determined by the insurers.
© Copyright 2022 BizInsure LLC, 2015 ALL RIGHTS RESERVED BizInsure LLC; CA DBA: Simple, Smart, BizInsure Insurance Agency LLC; NY DBA: BizInsure Services LLC; NH DBA: Simple, Smart, BizInsure Insurance Agency; PA DBA: BizInsure Services LLC. 2950 Buskirk Ave Suite 300, Walnut Creek, CA 94597. License #0H81929

Let's find

The coverage you need for your business

Professional Liability Insurance

Professional Liability Insurance

Get a quote

General Liability Insurance

General Liability Insurance

Get a quote

Business Owner’s Policy (BOP)

Business Owner’s Policy (BOP)

Get a quote

Workers Compensation Insurance

Workers Compensation Insurance

Get a quote

Let's find

The coverage you need for your business

Professional Liability Insurance

Professional Liability Insurance

Get a quote

General Liability Insurance

General Liability Insurance

Get a quote

Business Owner’s Policy (BOP)

Business Owner’s Policy (BOP)

Get a quote

Workers Compensation Insurance

Workers Compensation Insurance

Get a quote

Great experience. The representative was very helpful and worked hard to get me the right policy.
fast and easy online service
Amy R. Was personable, professional, knowledgeable, encouraged questions, made certain I understood explanations before moving on to the next. A great ambassador for your company!! Thank you.
Easy, correct coverage, value add on policy, easy financing
I enjoyed how fast and efficient getting a policy was and plan to refer to others who need Liabilty insurance
Great customer service very helpful
Awesome and affordable ...Will continue to do Bizness!!
Easy to renew.
They always answer the phone and make my COIs as requested. Love them! Heather
great with my business I love the way the business is handled. Thank you
Competent and friendly Organization.
It was an extremely simple process.
Very friendly and helpful, so far it was an easy process and fast. And my sells person was amazing! I didn't get her name but she has a amazing attitude and customer service!!!
Excellent services and program
They are good to have for a business insurance !!
very professional, high quality costumer services, polit
Great coverage and very flexible for my business needs!
They make it so easy to get insurance!
Easy process
Always and easy process. Thanks!
Great customer service. Quick and efficient. Amy rocked! I highly recommend using BizInsure for your insurance needs.
Great Customer Service and easy renewal process
Extremely polite, very information and able to answer all questions, quick with issuing the policy and half the price of most insurers. Thank you for making it pain-free.
This system is short and sweet, thanks
Patrice was very professional and prompt. I definitely recommend this company.
Process was quit and easy.
Just getting started... excited!
Thank you Jen for assisting me with my insurance needs. Very professional! It was a pleasure chatting with you too!
js_loader
Google Rating
4.7
Based on 414 reviews
×
js_loader





    This will close in 0 seconds