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    2 Replies Latest reply on Jun 24, 2010 11:32 AM by InsuranceLady

    Liability Insurance

    MackPack Newbie
      I am a representative for a company that is from out of state and sells direct to the end users. They have a seperate division that manufactures a different product line which I am not the representative for. That division is being sued and somehow the attorneys listed my company in the suit.

      I currently do not have liability insurance. What would be the best way to cover myself? I am a small business based out of my house and I am the only employee.
        • Re: Liability Insurance
          Mailman1 Wayfarer
          You may want to consult with an attorney and see if you really are liable for anything. A lot of times in a lawsuit, the suing party will include far more in the intial law suite so nothing is overlooked. It is quite possible that you will be excluded but please seek professional advice.

          Being a sole proprietor has the least insualtion against lawsuits. If you aren't incorporated you may want to consider at least a single member LLC structure. Speak to an accountant.

          Having liability insurance, E&O insurance, and a surety bond is never a bad idea when in business for yourself. It all depends on what type of business you are in. There are a lot of resources on the net to help you decide what is best for you.

          A primary rule in buinsess is to protect yourself from liability at all times.
          • Re: Liability Insurance
            InsuranceLady Newbie
            I am sorry that you have been brought into a lawsuit. This happens everyday to small businesses. It is amazing how you can be brought into the tiniest things that can be very costly to your already tight bottom line.
            Liability insurance provides a limit of liability for which you have become legally obligated to pay. This means that if the courts decide you did something to injure another through your negligence, then you pay the individual or company.
            But in your case from what you describe, you did nothing wrong. You were brought in anyway. What some small businesses do not understand is that liability insurance not only provides a limit of liability but it also provides "defense coverage". Most times this defense is outside the limit, meaning that it is supplemental to the limit. So if a case drags on for two years before you are exonerated, defense is paid by the policy. Of course, the policy coverages, exclusions and conditions must be met.
            Since you do not have insurance, I agree with Mailman1 that you should seek legal counsel.

            Going forward, you should look to purchase insurance for your business. If you are incorporated, most states require that you carry workers compensation because you are considered an employee of the corporation. If you are not incorporated, then most states allow you to elect or reject workers compensation. Then, of course, purchase the General Liability policy. Depending on the products you are selling and/or distributing, this can be relatively inexpensive. If you are on the internet, then cyber liability should be considered especially if you are taking payment or credit card information.
            Hope this helps.