6/14/2015 10:42 AM | 0 Comments


Small business owners are the backbone of the American economy, but they are also more likely to be sued than the average citizen. Avoid a costly settlement by keeping your business up to code and purchasing the correct insurance policies. Here are five things many small business owners often don’t even realize they are liable for: 

The Business
Most small businesses follow one of two traditional business structures: sole proprietorship or general ownership. These are both sound ways to structure a company, but what many people don’t realize is that these structures mean you are personally liable for your business. Both your professional and personal assets will be at risk unless you create a limited liability corporation (LLC). If you own a small business or are thinking about creating one, create an LLC. 

Data
Technology is not only changing the way new businesses are created; it is changing the way existing businesses are run. Most companies have all of their employee and client files living in a digital space. What happens if there’s a security breach? You are liable for all of your business’ data. As technology becomes more and more integral to the functioning of all businesses, it’s more important than ever to purchase a Data Breach Policy early on. 

Executive Workers
With great power comes great responsibility. Granted, Spiderman probably was not talking about Director and Officer Insurance policies, but the logic still applies. When you give your executives the power to make decisions that can directly affect the profitability of the business, they are liable for those actions. A Director and Officer Policy ensures that if any of your executives find themselves in legal trouble as a result of actions taken on the job, they will be protected. 

Personal Contracts
Are you a new small business owner? Take extra care to always sign any business contracts using the name of the business. Any time you sign a business contract with your name, you are personally liable if you breach that contract, not your company. 

Company Car
Many small business owners are excited to purchase a company car; however, what they don’t realize is that their personal car insurance policy doesn’t cover it. A company car requires a different insurance policy than your standard auto-insurance. The car is a business asset and requires a business auto insurance policy reflective of that. 

Owning a small business can be one of the most rewarding professional experiences in your lifetime—but you could lose it all if you don’t do it the right way. Read up on the law, know what you are liable for and protect yourself with the appropriate insurance policies. The American dream is what you make it.

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