SelfInformed

November 2015


Is Your Business Covered Against A Slip And Fall Accident?

Friday, November 20, 2015



Accidents happen. No matter how careful you are, there’s always the chance that someone will slip and fall down in your store. If they’re injured, they could sue you for the damages and the lawsuit can easily cripple your business. For example,
when a woman fell down in Costco in 2012, she won over $415,000 in her settlement. This is not something you want to pay for by yourself. We at the National Association for the Self-Employed have taken a look at this issue to help you figure out ways to protect your business from a costly lawsuit.

Business liability

When you own a store and bring people in, both as customers and employees, you are responsible for keeping them safe while they’re on your property. You can be sued if someone slips and falls because you didn’t do a reasonable job keeping them safe. For example, if you leave a spill of water on the floor, have a poorly lit aisle in the store, accidentally leave inventory on the floor where people can trip, etc. These are all problems that you could have fixed to avoid someone getting hurt. If you are ever sued, the judge and jury will look at what caused the problem to determine whether it was something you could have avoided by being more careful.

While you should make every effort to fix these problems, all it takes is one small oversight on your end to cause a huge lawsuit. That’s why it’s better to add insurance protection on top of maintaining a safe store. There are a few different ways to insure this risk.

Liability insurance

One way to protect your business against a lawsuit is through business liability insurance. These policies pay for the cost of a lawsuit that comes as a result of running your business. It would pay for your legal expenses as you go through a trial and if you need to pay out a legal settlement, your business liability insurance would pay for this as well.

These policies cover you in-case someone gets injured in your store, like through a slip and fall accident or if they burnt their tongue on hot coffee. They would also cover you if you are renting your storefront and accidentally damage the property so the landlord sues you to pay for the repairs. However, general liability insurance won’t cover you for damages caused from your business services. For example, if you are an accountant and are sued for giving someone bad tax advice, general liability insurance wouldn’t cover you. This is another type of liability insurance, known as professional liability. If you are worried about selling a defective product, you need product liability insurance. When you talk to your insurance agent, they should explain what kinds of policies you need to cover the different parts of your business.

General liability insurance typically costs $750 to $2,000 a year, according to the Small Business Association. The amount your policy will cost depends partly on the type of business you run. If you are a web designer who rarely sees customers face to face, you’ll pay less than a convenience store owner who deals with a large amount of foot traffic. Rates also depend on where your business is located because liability insurance costs more in some states than others. Finally, the cost depends on how much liability insurance you end up buying. When you buy a policy, you pick coverage limits for how much the policy will pay for a lawsuit. For example, your policy might pay for up to $100,000 in legal fees and up to $200,000 for a settlement. Buying more coverage adds to the insurance cost but buying too little could put you in a situation where you need to cover some legal costs yourself. You need to decide on the tradeoff.

Business owner’s insurance

Another way to cover your liability risk is through a Business Owner’s Policy (BOP). This insurance policy combines a few different types of insurance so you get a lower price compared to buying separate policies for every need. In a BOP, you typically receive some combination of liability insurance, property insurance, vehicle coverage, and business interruption coverage.

It costs less to buy all these policies through a BOP than to buy each insurance policy separately. This makes it an ideal choice especially for smaller businesses where cost is an issue. However, the coverage limits in a BOP don’t go as high as a standalone insurance policy. You should not assume that a BOP will give you all the liability insurance you need, especially if you are in a field where lawsuits are more likely. In this case, you may need to add extra liability coverage on top of the BOP to be completely protected.

State-required Insurance

While general liability insurance and BOP policies are good ideas, they aren’t required for running your business. If you’d like to manage the financial risk of a lawsuit yourself, you are free to do so. However, state governments require that you at least have some protection in place for your employees through Workers’ Compensation insurance.

This coverage pays for their medical treatment if they ever get hurt or sick while working for you. Workers’ compensation also pays to replace their wages if they become disabled from the incident and can no longer work. If you fail to have this required coverage, you’re breaking the law. If you’re caught you could be fined and charged with a criminal offense. For example, in New York if you don’t have Workers’ Compensation insurance, you could be fined up to $50,000 and be charged with a felony for your first offense. The employee could sue you for damages as well. On the other hand, if an employee accepts payment from Workers’ Compensation insurance, they waive their right to sue you for the incident.

Every state has its own separate Workers’ Compensation program. Depending on your state, 
you may need to buy this coverage from a private insurance company or directly from the state’s Workers’ Compensation insurance department. Some states also allow you to self-insure, meaning you would agree to pay for the medical bills and lost wages out of your own business assets. Check with the Workers’ Compensation department in your state to figure out your responsibility.

An accident can happen in a blink of an eye and without the right liability coverage this accident could ruin your business. By reviewing all these insurance options, you can come up with a plan to make sure your business is protected.

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