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Business Protection Bulletin

How can personal liability affect your company bottom line?

By March 1, 2014No Comments

Personal automobile liability, homeowners’ liability coverage, watercraft, aviation, and umbrella liability are designed to cover all the risks associated with day-to-day hazards. But, many times, entrepreneurs are not as vigilant with personal risk management as they are with their business’.

So ask yourself: do you want your partner’s 17 year-old son randomly choosing your next partner as the result of a DUI accident?

Once the underlying limits run out, the partnership share, the stock ownership, the thrift plans, become vulnerable to seizure. Yes, your new partner might be a bit angry with your old partner. Of course we advocate safe sober driving, but any claim can exceed the statutory limits of liability and create an unpleasant internal operations problem for your company. Cover the real risks properly.

Enterprise risk management uncovers this sort of hazard. Business continuation planning recommends surveying personal risk management among the owners and partners of any closely held company.

Just as you protect your company assets and income against casualty and property losses, protect your partnership too. Review the personal lines limits of liability partners carry. Require at least several million dollars of umbrella coverage.

Okay, you’re asking why so high.

Do you want your business to thrive for many years? Do you know how long it takes to get through the court system for a major liability case? If the injured party doesn’t settle, the business assets and partnership could be at risk for four years.

And if the case would settle for a million dollars today, claims inflation might make the payout three times that in four years. It is not entirely predictable. But it is predictable that your policy limit will not rise as the result of inflation. You must take action to increase that limit.

Stay ahead of the liability curve and protect your business structure with proper personal risk management risk assessment, planning, and program implementation.