Uncertainty.
The act of opening a business implies the desire to change many things: traditional industry standards, leadership and management, personal quality of life. In order to achieve the long-term goals associated with a better quality of life, the entrepreneur must protect his assets, with the long-term in mind.
Small business entrepreneurs face threats to their money from many directions: accounts receivable, crime losses, employee issues, but the most insidious is the liability claim. Liability claims can be particularly difficult because in many cases months or even years pass between the date of the loss and the date the policyholder is notified..
So a liability claim today may not be discovered for several years. Then the trial process may take several years. The judicial system reflects the then current standard, not the standard settlement from years gone by.
What changes over time? The business grows and prospers. Litigation settlements and jury awards grow faster than inflation. The liability limits required today for a well designed risk management program should reflect the assets and litigation reality likely to exist three years in the future.
Increasing your basic policy limits will help, but umbrella or excess liability policies can add layers of liability across all lines of coverage. Manage liability limits ahead of the claims curve, you’ll thank yourself years from now.
