How to protect your small business against negligence claims

By Rosana Beechum

Regardless of which industry you operate within, most businesses will at some point in their time face a negligence claim made about them. If you are a small business, knowing how to protect your company is crucial to ensuring that you remain afloat.

It is important to ensure that your business is as protected as it could be, in the event of a claim being made. Here are just a few ways to help protect your business before an incident occurs.

Be thorough when reviewing

If your company produces and sells a product, ensuring that a rigorous reviewing process is conducted before the product being sent to clients is essential. Failing to perform an effective and efficient product testing process can result in a manufacturers negligence claim, even failure to recall any dangerous/faulty products. As such, it is important to ensure that you and your employees have undertaken efficient steps to ensure that no faulty products are sent to clients. In doing so, you can reduce the risk of your business receiving any negligence claims for potentially harmful products.

Have E&O liability insurance in place

Errors & Omissions liability insurance (E&O) is a strand of professional liability insurance. How it works is that it will protect companies, their workers as well as any other professionals against claims made regarding inadequate work or negligent actions. When you compare different insurance companies for E&O liability insurance, look into what their policies include and what they do not include. For instance, you may find that one offers coverage to temporary employees, whilst another does not. Additionally, you will notice that E&O liability insurance does not cover any criminal prosecution and that certain liabilities may occur but will not be covered in the policy.

Consider hiring an attorney

For smaller businesses just starting, it could be beneficial to have an attorney on standby in case you run into any issues as you begin to expand. Having an attorney who will be able to advise you on what steps to take before you take action on a negligence claim that your company has been faced with, will be of great assistance as they can guide you on how to move forward with the claim. When you are just starting, it can be overwhelming to know how to approach or handle a case filed against you. As such, having the legal support of a professional who is well versed in not just the industry but the local laws, will help to make the process far simpler.

It will all be worthwhile 

Implementing strategies such as rigorous testing to ensure product safety or investing in insurance might sound like costly and time-consuming tasks, however, they will be key players in ensuring that your business is well protected over any potential negligence claims that could come your way.

Although you will be working to ensure that the highest quality product is produced, and the quality of work exceeds the clients’ expectations, your business will inevitably run into an issue at some point in its time. As such, it is better to be prepared for such an event to prevent your business from taking a harsh hit that could put your company at risk financially. Having the safety net of insurance and proof of great care being delivered will be beneficial to your case making the time and money spent worthwhile.


Drawing on her background working for and managing small businesses across the corporate market, Rosana Beechum is perfectly placed to offer actionable tips and informative insight.

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