As we experienced in 2008 and more recently with the 2020 pandemic, an economic downturn often strikes worry among business owners and their employees in virtually every industry. Even companies that escape tough times relatively unharmed could still fall into the trap of uninsured business liability risks for the long term. To help, Coterie Insurance has compiled these tips to keep your business prospering.
The Chain Reaction
It’s no secret that the financial security of your business hinges on that of your partners, vendors and suppliers, and that in tough times, everyone is looking for a way to cut costs.
Never rely on the insurance coverage of your business partners to protect your assets or protect against third-party liability claims. In the event of supplier bankruptcy, partner organizations could eventually be liable for claims.
Ultimately, in order to protect your company, it may be a smart long-term investment to expand your coverage limits. Many businesses are trying to cut costs by lowering their coverage, but you do not want to pay out of pocket for an expensive claim laid on your shoulders because of your suppliers’ shortcomings. If you are involved in outsourcing or are considering this option to mitigate costs, first talk to Coterie Insurance about covering the associated risks.
Shaky Contracts Make for Shaky Business
In a turbulent economic climate, it is extremely important to have thorough, seamless contracts. They should clearly outline the obligation of each party and discuss dispute resolution policies so that if something goes wrong, you avoid a messy and expensive disagreement. Contracts protect you and the other party you are doing business with!
It is never a good business decision to sign a contract hastily, but especially in a difficult economic time, be sure to look into all the risks and legal ramifications. Small companies who partner with larger companies are often strong-armed into making decisions with which they are not completely comfortable. Take your time and make the best decision for your business.
Be Cautious With Change
For many businesses, change is an intelligent way of reacting to an economic crisis. It allows you to explore new customer bases and offer additional products or services. While expanding in either of these ways can revolutionize your business and keep you afloat in tough times, it could also expose you to additional liability you may not have dealt with before.
When you experiment with new products or services, you will inevitably face a learning curve, which puts you at a larger risk of facing product liability claims. You may want to consider purchasing additional lines of coverage to protect yourself, as your surplus lines insurance policy may only cover claims arising from one particular product or line of business.
By the same token, shifting or expanding your customer base may open you up to class action lawsuits. You are not changing your product or service, but you are tapping into another market that may react differently to product failure. This is another instance in which it is important to be covered for potential liabilities resulting from a change in your business.
At Coterie Insurance, we offer various insurance products that will protect your business or your client’s business so they can keep doing what they do best, and remove the worry of having the right coverage. From Business Owners Policy (BOP) to General Liability policy (GL) to Professional Liability policy (PL), contact us today to be sure your plan for escaping an economic downturn unscathed does not backfire.