Insurance is like the eject button on a fighter plane. You know you need to have it, but you'd rather not be in the situation where you have to use it.
Here are five things you can do to protect your business from an expensive lawsuit—in other words, to increase the odds that you'll never need the eject button…
- Get everything in writing. As someone who works providing specialty services, you know that some customers are impossible to please. Having a paper trail of invoices, receipts, and other documentation can help prevent any miscommunication between you and your customers. When a customer thinks you haven't given them what they asked for or are over-charging them, you can point to their original order.
You should also make sure to keep your customers in the loop if anything changes with their order. If you're a lawyer, you know that you may start work for a client and realize that the contracts will be much more complicated than you originally estimated. Keep your customer up-to-date if the project is going to cost more than you anticipated.
In order to keep a record of any changes like this, always send a follow-up email after a phone call. This gives you a way to archive what you and your client have discussed verbally.
Keep physical and digital copies of your contracts. It's too easy to lose data. A corrupt hard drive can wipe out years worth contracts and customer data that you would need to defend yourself in a Professional Liability Insurance (E&O) claim.
- Update your security software and encrypt your data. Keeping up-to-date network security and protocol can help prevent your business from being the victim of a cyber attack. You can also encrypt your data, which is usually much easier than people realize. Most operating systems can automatically encrypt data any time you log off your computer. You'll just need to have the proper settings clicked.
One other simple way to protect your company from cyber attacks is to have strong password requirements and to mandate changing passwords every few months. Require your employees to have passwords that are a mix of numbers, letters, and symbols.
These kinds of security measures may also lower your premiums. When you apply for Cyber Liability Insurance, having these practices in place can help your business qualify for lower rates.
- Train your employees. If you saw the world the way an insurance company does, it wouldn't be very much fun. Every time an employee drove a car, you would see auto liability. Anytime someone stoops to pick up a box of printer paper—Worker's Compensation. It may seem strange, but that is exactly how the insurance world thinks.
Train your employees to operate any equipment your business uses. Establish clear driving protocols (e.g., no texting and driving). You'll also want to remind your employees (and yourself) of the best ways to lift heavy objects.
You don't have to do all of this yourself. You've got enough to do. You can assign a particular employee to train others, clean slippery floors, and keep an eye on other potential problems. You may not be able to (or not want to) see the world like an insurance company, but taking the various kinds of liability you face into consideration will help protect your business from a costly lawsuit.
- Maintain good relationships with customers and employees. Whether you're a lawyer, medical biller, travel agency, or employment agency, you often work with customers in a high-stress situations. Frequently you are working with constraints of time and money.
Maintaining a strong relationship with clients that is both cordial and professional can go a long way to preventing your business from being served with a lawsuit. Dissatisfied customers are more likely to talk out a problem with a bill or project if they have a strong track record with your business.
In the same way, having a strong but professional relationship with your employees will help defuse tensions.
- Audit your finances quarterly. Unless you're an accountant, you probably don't find it all that much fun to dig through your finances and make sure everything is in order.
But that's exactly what you should be doing at least once a quarter. Auditing your finances will help you find out if your business has lost money from a cyber criminal skimming your bank account or a dishonest employee.
It makes a big difference if you realize fraud and other irregularities right away rather than months down the road. The sooner you notice financial problems, the more money you'll be able to recover and the stronger your company will be financially.
Auditing your finances will also help you in the long run. A regular and thorough examination of where and how you spend money will give you an understanding of how to make your business more efficient and where you can better apply your resources.
It can also prevent an employee from stealing or making a mistake with your finances. Employees who know how closely and regularly you examine the ledgers will pay better attention to their own work and be less tempted to be dishonest.
- Contact your insurance provider as soon as there is an accident or incident. You pay for insurance, so you might as well use it, right?
If something happens at your workplace that could result in a lawsuit, make sure you contact your insurance company preemptively. Insurance companies often have strategies to prevent incidents from spiraling out of control.
Let's say an employee strains their back while carrying supplies to your office. Call your insurance provider. They will want to know and make sure that you follow the right protocol, the employee gets the medical treatment they need, and you are protected from greater liability.
These six strategies can help your small business avoid the situations that bring about a lawsuit.
Contact an Insurance Expert at insureon: Custom Insurance Plans for Lawyers, Employment Agencies, Travel Agents, Truckers, and Other Professional and Specialty Service Companies
At insureon, we hope you're never in a situation where you have to use your insurance, but we know that's not a reality. With our background in insuring other lawyers, truckers, authors, and other professional and specialty service providers, we'll make sure you get the appropriate coverage for the liabilities your business faces.
Contact one of our agents today and make sure you're covered when a lawsuit threatens your business.