What Freelancers and Small Businesses Should Know About Liability

If you are a small-business owner or a freelancer, you most likely don’t have deep pockets to reach into if you get sued and lose your case. As the sole proprietor of your company and its assets, you are personally liable and could end up losing everything: your business, your home, your money.

At Lusk Law, LLC, we pride ourselves on being Advocates for Life’s Obstacles and Opportunities. As experienced Maryland business law attorneys, we know the complex challenges that small-business owners face. Whether you need representation in a lawsuit or advice on any other legal matter, we offer personalized service grounded in a thorough understanding of the law.

Why Would Someone Sue My Business?

You do your best to offer a high-quality service or product and it’s important to you to keep every customer and employee happy. But no matter how ethical and conscientious you are, problems will crop up. And if you aren’t able to resolve the issue to the satisfaction of the other party, you may find yourself being served. Business lawsuits generally fall into the following categories:

  • Breach of business contract
  • Malpractice or negligence by a professional, such as a doctor
  • Premises liability, like a slip and fall that occurs at your business site
  • Employer liability, or damages caused by an employee
  • Infringement of patents, copyrights, or trade secrets
  • Negligence, or failure to use “reasonable care” resulting in someone’s injury or damages
  • Defective-product liability
  • Payroll tax liability.

How Can I Protect Myself and My Business?

Small business owners and even freelancers should have insurance to safeguard themselves, their company, and their personal assets. If you are responsible for someone else’s injuries or damages, liability insurance will cover legal fees, medical bills, and all other expenses up to your policy’s limit. Liability insurance premiums are considered tax-deductible business expenses.

General Liability Insurance

If a client or customer suffers an injury or damages at your place of business or you cause damages outside of your office (for example, at a customer’s home), general liability insurance will cover the costs. If you work from home, don’t rely on your homeowner’s or renter’s policy — they typically don’t pay for damages to people who are at your home for business purposes. General liability insurance isn’t expensive, and you can get an in-home policy for a home-based business or a business-owner’s policy for a non-home-based company.

Professional Liability Insurance

Your general liability policy will not help you in case of professional negligence — that is, damages caused by a mistake you made in your professional services. Some types of workers are required by law to carry a separate type of insurance called professional liability insurance, or “errors and omissions.” This E&O coverage is standard for:

  • Doctors
  • Attorneys
  • Insurance professionals
  • Pension plan fiduciaries
  • Stockbrokers
  • Architects
  • Accountants

If you are not in one of the above occupations, you can still purchase E&O insurance coverage, but it is quite expensive.

If your small company is facing a lawsuit, or you’d like advice on insurance and other ways to protect your business, call Rebekah Lusk and her associates at Lusk Law, LLC.

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