Food For Thought - Do you need business insurance?

If you sell your crafted products the answer is probably yes. If you have any major assets the answer is definitely yes. In this day and age the concept of taking responsibilty for your own actions does not apply. While often you may look at a lawsuit and think that it is ridiculous, but any litigation involving you is a serious matter. I’m sure several corporations thought it absurd to be sued because their customer did something stupid with their products. You have heard about them - coffee was too hot, someone used their lawnmover to cut their shrubs, someone set themselves on fire while wearing their clothes, and so forth -  yet the plaintiffs won millions of dollars in these cases.

Cases like this often don’t come down to right or wrong or facts or common sense, but are decided by emotions. To be human is to have some degree of empathy for fellow humans and in such cases the injured person is typically sitting right in front of them for days or weeks. People dont show the same sympaty for businesses, and in fact a study I saw several years ago pointed out that much of the television programming we are watching reinforces the belief that businesses are evil (among other things). This starts at an early age - with cartoons aimed at children. Consider that for a second - we are conditioning our youngsters to hate businesses. Granted this is aimed mostly at big business, but can your child readily differentiate between a mega corporation and the store down the block?  I wish I could recall the name of the study as I would like to link it, but think about this next time you are watching tv.

The real nightmare of this for a small business owner is that the amount of these lawsuits is often way more than you could practically insure yourself for - not uncommonly hundreds of millions more. Fortunately most small businesses do not have enough assets to  make the expense of such litigation worth pursuing, although this does not make you immune altogether. If your business is not a corporation, then in most states you are personally liable and your non business assets are at risk in such a lawsuit.

Typically if you own anything big such as property or a house, incorporating your business will provide some personal protection in case your business gets sued. I highly recommend that at the very least you incorporate if you plan to sell your crafts. The rules on this vary from state to state so you should speak with an accountant and a lawyer on this to protect yourself.

Please comment or add your thoughts on this.