Although a business owner may have insurance liability coverage to protect them financially if their action or inaction caused property or bodily damage to others, it’s also prudent to get personal liability insurance. This is because of the possibility of ludicrous lawsuits asking for outrageous settlements. For instance, take the legal case of a dry cleaner that was successfully sued $65 million for losing a customer’s pair of pants. In our litigious society, a business owner or an executive in a large business may be targeted for a lawsuit for no other reason than that they are financially successful. The plaintiff may file a frivolous claim just to improve their own financial woes in life.

There are numerous ways a business owner can face significant losses. Although a business owner may be protected by liability insurance, policy limits may still expose him or her to paying court costs and damages from a liability claim.

Lawsuits Targeted To Exploit Successful Business People

A business owner with deep pockets will risk the possibility of attracting someone looking for a way to pick these pockets. Claims can cost time and money, and even when dismissed by the court, can cost emotional distress over the possibility of financial ruin, not to mention the extreme costs of hiring a defense attorney to prove one’s innocence.

The more prominent the business owner, the more public knowledge there is about his or her finances, property holdings, inheritance, and other assets, the greater the risk. Claims can stretch from obvious ruses like tripping and falling on business premises to much more elaborate schemes.

Anyone Can Be Sued For Frivolous Reasons

Even an aspiring business owner whose business has still not turned a profit can be sued by someone for accidental body injury or property damage. Insurance policies with liability protection may not be able to fully protect a business person, their family, business and assets in the event of a serious lawsuit.

Some Worst Case Scenarios

Here are some possible worst case scenarios that could ruin a business owner:

• The business owner’s teenage son or daughter may be involved in an automobile accident and a significant legal award given to the injured party because of the business owner’s wealth.

• A guest might fall into the swimming pool at a house party and hold the host, a successful business owner, responsible for nearly drowning.

• The business owner’s dog might bite someone trespassing across the property.

• A service man might fall because of a loose tile while fixing the roof.

A Small Fee for Substantial Protection

The point here is that common place accidents, many of which the business owner found out about after the fact, are used as a powerful pretext to make a liability claim.

In choosing to get added insurance, a business person has to compare the small additional cost of premiums against the potentially large financial losses that a possible lawsuit could cause to family, business, reputation and even lifestyle.

Increasing personal liability insurance adds a higher range of umbrella protection. It fills in the gaps not covered by other existing insurance. It protects from legal awards when legal awards exhaust the limits of other insurance.