What Happens When Your Business is Sued?
One of the most difficult situations to face as a business owner is the possibility of being sued due to damage to another person's property or injury to a person. Liability claims can come from anywhere.
The following examples are claims that we have received:
- We have seen falls and injuries to customers or suppliers visiting a business.
- We have had claims where a consultant left their bag on the ground and an employee of the client he was visiting tripped over it. This resulted in a twisted knee and a knee reconstruction.
- We have had an IT consultant knock his coffee over into a server, causing extensive damage.
- We have had customers injured visiting a shop and a light fitting has fallen out of the ceiling, hitting them on the head.
- We have had an outbreak of food poisoning in a café injuring 31 people.
- We have had tenants suing the property owner for water leaks coming in through the roof. This damaged electronic equipment, desks and carpet.
They can and do happen! In fact it is either a liability claim or a business interruption claim where your business can easily become insolvent if not insured.
Any business that is manufacturing or repairing products, or those serving or selling food items are at risk if those products cause an injury or property damage to another person. Recently we heard about 161 school principals at a conference in the Brisbane Convention Centre becoming ill from food served to them. Severe reactions to food can cause very serious injury or even loss of life.
Below is a brief outline on managing liability risks:
Preparation is Key - Have a plan in place to deal with potential liability claims. This can include a crisis management plan. Some of these areas include:
- Employee Training
- Inspect and clean display and public areas regularly.
- Employees need to know how to call emergency services or key company personnel.
- If an incident occurs not to discuss or admit company liability.
- Documentation - Employees should have access to incident report forms and who to pass them on to.
- Appropriate Insurance - Having the most appropriate insurance in place is vital. Your Insurance Broker is your trusted adviser on these areas of risk and can find the best insurance deal for you. This means sufficient cover for most losses or the particular risk most likely to occur.
- Surveillance and Monitoring - Liability claims can be limited by surveillance and monitoring. Public areas can be monitored by cameras. Cameras have become so cheap and such high resolution, having a recording of the incident that has occurred can assist greatly in managing the matter.
The Accident - Making a Claim
When an incident occurs, first call your insurance broker or adviser to report the event, or if preferred speak directly to the insurer. Never delay reporting. You will either be provided claims forms or with some insurers you can report the claim verbally. Again, if followed up by a third party claimant or their solicitor, do not respond. Do not admit liability. There is often pressure to do so, but leave it to the experts.
Advisr does not provide advice and does not hold a financial service license (AFSL). All information above has been provided by Robert Cooper.