Sunday, November 15, 2009

SMALL BUSINESSES - LIABILITY INSURANCE

While I am on the subject of small businesses, I have recently been having discussions with small business owners and others as to whether or not they should carry liability insurance. I know it is an expense and it can be considerable. Even with attorneys in practice, there are some attorney who, for reasons of cost or whatever, do not carry malpractice insurance (although we do have the New York State Lawyers' Fund for Client Protection, still that doesn't protect all clients' from the misconduct of attorneys). But all small businesses, professional services or otherwise, should carry liability insurances and some types of businesses are required under law or contract to carry such insurance. As a lawyer, I would not advise anyone to contract with anyone for services who was uninsured and would ask that my client, in any contract for services, be named as an additional insured and received a binder. Dealing with the uninsured is not recommended by me. Moreover, although you may be incorporated, etc. and feel your personal assets are protected, usually an attorney will name the business owner or owners individually as a defendant in the action and thus you are open to potential liability, especially if the plaintiff is able to "pierce the corporate veil", viz., that, inter alia, the corporation was used not just as a business but for personal expenses, etc.

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