First Line of Defense for Small Business

January 8, 2014 5:25 pm

The weather in Norwalk and surrounding communities has been treacherous lately. At my house, we were down around -10 degrees before factoring in the wind chill. On top of that, snow was blowing and ice was accumulating around buildings, sidewalks and other facilities. In other words, we’ve had the type of weather that is a recipe for problems.

Many people set up limited liability companies and corporations in an effort to shield personal assets from liabilities associated with operating a business or perhaps in order to separate different business liabilities from one another. In any event, the establishment of the LLC or corporation is often about protecting the business owner from one risk or another. Those steps are extraordinarily important. However, there’s a first line of defense that’s equally important.

While our office doesn’t sell insurance (we practice law), a good insurance policy is still the first line of defense any business owner should have against potential risks associated with the business. For example, suppose an employee is driving a route on behalf of an LLC and is the cause of an accident because the vehicle can’t stop on the ice. The injured party now has a lawsuit against the business. It might be true that the liability associated with the accident is limited to the business itself and can’t be pursued against the business owner personally; however, that’s only a partial victory. A bigger victory would be won if the insurance policy (the first line of defense) is there to provide a legal defense to the business to better ensure that business assets need not be used to satisfy a judgment from an injured party.

In sum, as small business owners are planning for 2014, one important step is to review insurance policies to make sure risk is being managed at the front lines.

Mark Coriell

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