Managing Business Risks - Avoiding Costly Lawsuits

SIMPLE STEPS TO PROTECT YOUR COMPANY FROM NUISANCE LAWSUITS

A March 2007 study from the Pacific Research Institute titled Jackpot Justice: The True Cost of America’s Tort System, stated that lawsuits in the U.S. cost the American public an estimated $865 billion per year. Much of this litigation was needless or stemmed from nuisance lawsuits which largely could have been avoided. In these litigious times, business owners need to sit down and analyze their risk exposure.

Here are six proactive steps that every business owner can implement to reduce their liability resulting from nuisance lawsuits:

First, form an asset protection plan by designing a list of all the potential assets you stand to lose from a lawsuit. Take a hard look at your current insurance coverage. Make a point to sit down with both your insurance agent and lawyer to limit your exposure from both an insurance and legal perspective.

Second, separate your personal assets from business assets by setting up a C or S corporation or else consider a Limited Liability partnership or even a Limited Liability company. Although this action does nothing to limit lawsuits, you might be able to remove your personal assets from a lawsuit settlement. Consider setting up a qualified retirement plan as federal laws offer protection from creditors for such accounts. However, remember that some states might not include IRAs so seek qualified advice.

Third, purchase the right Liability insurance for your business as this can be the best investment you can make. Seriously consider buying Excess or Umbrella coverage as you can easily get an additional $1million coverage for a very inexpensive rate. Today, almost every business that has employees should consider Employment Practices Liability Coverage (EPL) This form of insurance covers current employees, past employees, potential employees, customers or clients from employment related civil actions of discrimination such as gender, age, race or disability, sexual harassment litigation, wrongful dismissal actions, breach of contract, retaliation and other claims brought against your company. Due to the significant rise in such claims, this relatively new insurance coverage has taken on significant importance for companies of any size in recent years. Be sure to contact us about these and other coverages for your company.

Fourth, form your own risk management plan to eliminate unnecessary risk in your workplace. Be proactive in the house cleaning for your company and eliminate hazards by performing repairs or maintenance as they arise. Instill strict and enforceable policies to protect the safety of workers and the public from harmful situations that can quickly translate into a needless lawsuit.

Fifth, specify your policies to clarify everything and anything that could result in a lawsuit. An employee handbook should be issued to all staff. Have them read the handbook before they start work and sign an appropriate form stating they have read and understand the material. Ensure any policies directed to your customers or general public are clearly visible and explicit. Incorporate your customer policies in all your promotional material. Don’t trip yourself up by making promises which can’t be kept. Train all your staff so they clearly understand any policies that apply to customers or other relevant third parties.

Lastly, consider taping phone conversations so you have a record of what your caller is inquiring or complaining about. This also provides you with a record of how staff are responding to the caller. Remember that if you decide to take this approach, you must initiate the call with a notice that the call is being recorded. Clear this with your legal advisor first.

These are but a few simple steps that any company can take to reduce their liability exposure from a host of costly nuisance lawsuits.

Homeowners Winter Weather Preparation

Winter storms can wreak havoc on your home and account for a large percentage of homeowners insurance claims nationwide after hurricane season comes to a close each year on November 30. The time to winterproof your home is before the cold weather sets in, according to the Insurance Information Institute (I.I.I.).

Catastrophic winter storms cause an average of $1.2 billion in insured damages each year in the U.S. Water damage and freezing account for about 20 percent of all homeowners insurance claims annually, while wind and hail account for close to 30 percent of total claims. The average homeowners claim for water damage and freezing is over $5,000, according to the I.I.I.

Many winter-related disasters can be prevented by taking a few simple steps to protect your home from snow, wind and freezing temperatures. “With the weather still relatively mild, autumn is the perfect time to winterproof your home,” said Jeanne M. Salvatore, senior vice president and consumer spokesperson for the I.I.I.
The first step is to make sure your home and possessions are properly insured. “Standard homeowners policies cover winter related disasters such as burst pipes, ice dams and wind and hail damage, as well as property damages that are caused by the weight of ice or snow,” noted Salvatore.

Winter damage to cars is covered under the comprehensive portion of an auto insurance policy, which is an optional coverage.
Property damage caused by flooding, however, is not covered under standard homeowners and renters insurance policies. Generally speaking, property losses caused by water that comes into the home from the ground up are covered under a separate flood insurance policy. This is available from the name of linkNational Flood Insurance Program and some private insurers. If, for instance, there is melting snow and rain that seeps into a house from the ground rather than from the roof, the resulting property damage would generally only be covered by a flood insurance policy. Flood insurance is available for both homeowners and renters.
To help you prepare for winter, the I.I.I. offers the following checklist:

OUTSIDE YOUR HOME

• Clean out gutters. Remove leaves, sticks and other debris from gutters, so melting snow and ice can flow freely. This can prevent ice damming—a condition where water is unable to drain through the gutters and instead seeps into the house causing water to drip from the ceilings and walls.
• Install gutter guards. Available in most hardware and home stores, “gutter guards” prevent debris from entering the gutter and divert the flow of water away from the house and into the ground.
• Trim trees and remove dead branches. Ice, snow and wind can cause weak trees or branches to break, causing damage to your home or car, as well as injury to people on your property.
• Repair steps and handrails. Keeping steps and handrails in good condition can prevent someone from falling and being seriously injured. Broken stairs and banisters can become lethal when covered with snow and ice.
• Seal cracks and holes in outside walls and foundations. Use caulking to protect water pipes and make sure that skylights and other roof openings have proper weather stripping to prevent snowmelt from seeping into your home.

INSIDE YOUR HOME

• Keep the house warm. Set the thermostat for at least 65 degrees since the temperature inside the walls, where the pipes are located, is substantially colder—if the temperature is too low, the pipes can freeze and burst.
• Add extra insulation to attics, basements and crawl spaces. If too much heat escapes through the attic, it can cause snow or ice to melt on the roof. Water can then refreeze, causing more snow and ice to build up. This can result in a collapsed roof, and can contribute to ice damming. The attic should ideally be 5 to 10 degrees warmer than the outside air. Well-insulated basements and crawl spaces will also help protect pipes from freezing. For the same reason, you may also want to consider insulating unfinished rooms.
• Have the heating system serviced. Furnaces, boilers and chimneys should be serviced at least once a year to make sure they are working properly.
• Check pipes. Look closely for cracks and leaks and have the pipes repaired immediately. Wrap exposed pipes with heating tape to insulate them.
• Install an emergency pressure release valve in your plumbing system. This device will protect against the increased pressure caused by freezing pipes and can help prevent your pipes from bursting.
• Make sure that smoke and fire alarms are working properly. Residential fires increase in the winter so it is important to protect your family with working alarm systems. Also, consider installing a carbon dioxide detector, since a well sealed home can trap this toxic gas.
• Learn how to shut the water off and know where your pipes are located. If your pipes freeze, time is of the essence. The quicker you can shut off the water or direct your plumber to the problem, the better chance you have of preventing pipes from bursting.
• Hire a licensed contractor to look for structural damage. If damage is discovered, you can have it repaired immediately rather than waiting for a more severe problem to occur. Also, ask about ways to prevent water damage resulting from snow-related flooding. Plastic coatings for internal basement walls, sump pumps and other methods can prevent flood damage to your home and belongings.

If you are going to be away from your home for an extended period of time, turn the water off and have the water system drained by a professional to keep pipes from freezing or bursting. Also, have someone check your home periodically so that, if there is a problem, it can be fixed quickly, thus lessening the potential damage.