One of the greatest risk hazards to any business is the possibility of negligence and any resultant liability. How to defend against these risks? Can you put together an effective defensive strategy?

You first line of defense is your risk management plan. Identify those risks with both yourself and your company that may prevent a possible liability claim at some future date. This is not just for the small business but for the self employed entrepreneur as well. Once you have put such a plan in place, and consider your insurance options, you need to continuously educate and instruct your employees. Proactive engagement is the key.

Despite precautions, things can occur that may end up provoking a law suit. This is where you and your insurance advisor need to team up to craft coverage specifically aimed at your business and industry.

In insurance, and legal, terms, liability, generally, means that someone must set right a particular harm done to another person or business. One course of action is known as a remedy. This tends to be some manner of compensation, financial or otherwise. There can be economic as well as non-economic damages claimed. Economic is usually concerned with property damage and such while non-economic damage tends to lean toward the pain and suffering arena.

One of the major damages that can be awarded is punitive damages. These damages have been specifically designed to intentionally punish the wrong doer.  Liability risk can go both ways. You can wrong someone or someone can wrong you. Your insurance ramifications can be confusing which is why you need to have an effective insurance coverage plan in place.

Contract liability is often an area of contention that will most concern small businesses. Liability in this area tends to be a breach of contract. Promises made but not delivered upon. While liability is rather explicit, negligence tends to be defined as a failure of behavior. Some one or some business has failed to act in an effort to prevent some manner of damage from happening.

The last thing you, or your business needs, is a negligence or liability suit rearing its ugly head. The consequences for you and your business could be catastrophic. After your risk management strategies are in place, you need to bring in your insurance advisor so that the both of you can measure options and design coverage that will be most helpful to you and your situation.