I’m Being Sued – Now What?
We live in a litigious society. The court system sees over a hundred million lawsuits every year.
If your business is involved in one, ensure you take proper steps to navigate the process. Some suits are easily dismissed, while others can cripple your company: the median cost for a business liability lawsuit is around $54,000, and contract disputes are typically closer to $91,000.
With these figures in mind, your essential first step is to obtain proper insurance coverage and have it in place before a suit occurs. The policies that are most applicable in the event of a lawsuit include general liability insurance, workers’ compensation, and professional liability insurance. But if a suit exceeds your policy limitations, the addition of an umbrella policy may save large out-of-pocket expenses, and maybe your company.
Supposing you have solid insurance coverage and are hit with a lawsuit. The next steps are:
Contact your attorney. If you don’t have an attorney already, get one, and review the lawsuit along with him or her. Ensure your attorney has all the information needed to accurately and effectively represent you.
Contact your insurance provider. Do this right away, as many policies require you to forward suit papers promptly to your insurance carrier. As you did with your attorney, ensure the details are clear. Verify what coverage you have to determine if the type of suit you are facing is covered under your policies.
If you are concerned your policies might not cover the suit, talk to your agent about the options available to you and to confirm whether the specific circumstances of your case will fall under your policy. Don’t make assumptions about coverage. Check dollar limits as well. This will help you develop a good understanding of how much, if anything, the suit will cost you out of pocket.
Typically, if the suit falls under your policies, the coverage will pay for attorneys’ fees and costs of any settlement.
Decide how to proceed. With professional advice from both your attorney and your insurance provider, determine how to respond to the complaint.
Respond to the complaint. Do this in a professional and timely manner.
Partner with your insurance carrier. Most suits, especially workers’ compensation cases, require investigation. Cooperate with all carriers involved to ensure the case moves along as smoothly as possible. You may need to provide documentation, employee files, or other information. If you receive requests, inform your insurance agent and attorney, who will take care of these requests as appropriate; don’t provide documents to anyone else.
Throughout the process, your insurance provider is a strong ally. Don’t miss out on the advantages this partnership offers. Keep your lines of communication open, and allow your carrier to assist you as you go through this difficult event.
If you are not currently facing a lawsuit, don’t wait until one occurs. Contact your agent to discuss your current policies.
Then make any changes necessary to ensure you’re solidly covered.