Small Businesses: Understanding the Risk of Litigation

As a small business owner, you know that starting a business involves risks. In today’s society, where suing is common, everyone faces some risk of being taken to court. Litigation, or being sued, is not just a problem for large companies; it can happen to small businesses, too, and it can be very costly and stressful.

Litigation risks, or legal risks, are the chances that someone might take legal action due to what a person or company does, doesn’t do, or because of its products or services. These risks can be very different depending on the area, country, and industry. Badly written contracts, careless business planning, and not knowing enough about rules or laws can lead to more chances of injury claims, long legal battles, and big expenses.

The best way to determine and deal with possible legal problems is to spot them early when planning your business and take steps to protect your new company.

Common types of litigation risks for small businesses

The financial and practical challenges of starting a business can often discourage people from pursuing their dreams of becoming entrepreneurs. Plus, there are legal risks that need to be handled to ensure the safety of your business in the future, including contract disputes, premises liabilities, products or services liabilities, employment disputes, intellectual property disputes, and more.

Below we’ve outlined some of the more common types of litigation risks for small businesses.

Contract disputes

This is the most common type of legal risk that businesses face. In fact, when running a small business, you might face many contract risks, such as disagreements with suppliers, customers, or service providers about what was agreed upon. With contract risk, there’s the risk of losing money because either someone backs out of a contract or your organization doesn’t properly handle the benefits or duties outlined in the contract. Plus, if your contract processes are flawed (manual errors, delays in finalizing contracts, non-compliant terms), your business could be at risk here, too.

Premises liability

Business owners are responsible for any injuries that happen inside their business or on their property. This means the place where your business is located can be a source of legal risk. For example, if someone trips, falls, and gets hurt while visiting your business, they could sue your company and ask for money to cover their injuries and other costs like lost wages or medical bills. That’s why it’s important to have proper policies and procedures in place to handle potential dangers, like wet floors or icy sidewalks, to keep your small business protected.

Product or service liability

Product liability involves selling a defective product that ends up hurting someone. Service liability is similar but involves a company’s services harming a customer. No matter what kind of business you run, there are legal and financial risks linked to the services you offer or the products you make, distribute, or sell. If your products are faulty, your services are not good, or you don’t give enough warnings, customers might sue your business.

Employment disputes

Many small businesses rely on their employees to help their business succeed. That’s why knowing about common issues like harassment, wage disputes, and Workers’ Compensation can help protect your business from costly lawsuits and damage to your reputation. Common employment issues often involve harassment, discrimination, and problems with wages, overtime, and salaries. Learning about these common disputes can help you create a better workplace for your employees and improve your experience as a small business owner.

Intellectual property disputes

Sometimes businesses use trademarks or designs from other companies because they like them and think there won’t be any problems. However, this is not true. In fact, small businesses can face accusations of infringing on another’s trademarks, copyrights, or patents. To avoid getting sued over using someone else’s intellectual property, it’s crucial that your new business has a basic understanding of intellectual property law. On top of that, you might also need to defend your own intellectual property rights.

Compliance and regulatory issues

Your business might be subject to rules set by government bodies, commissions, or agencies. It’s important to know exactly which regulations apply to what your company does. You also need to understand the specific rules, like specifications, policies, standards, or laws you need to follow to avoid fines or legal issues.

How to mitigate the risk of litigation for small businesses

Litigation can be stressful, costly, and time-consuming. Here are some simple tips to help reduce the chance of legal problems for a small business.

Understand and comply with legal requirements

First, you should understand the laws that affect your business. This includes rules at the federal, state, and local levels. Make sure you are following all the rules related to your employees, your contracts, and any specific laws for your industry. Keep up-to-date by attending workshops, subscribing to legal updates, or talking to lawyers.

Write and review contracts carefully

Strong contracts are key to smooth business operations. Every contract should clearly spell out everyone’s responsibilities. It’s also a good idea to have a lawyer look over your contracts regularly to ensure they’re complete and up to date.

Implement and enforce company policies

Write clear policies on important issues like workplace behaviour, sexual harassment, and how to handle company data. Make sure every employee gets a copy of these policies and understands them. Hold training sessions to review these policies regularly.

Keep detailed records

Good record-keeping can protect you if you face a lawsuit. Keep detailed records of everything from finances and employee information to customer interactions and safety checks.

Use waivers and disclaimers

If your business involves risks (like physical activities), having customers sign waivers can protect you from some lawsuits. Disclaimers can also limit your liability, especially if your business offers advice or information.

Get the right insurance coverage

Insurance can cover you against many types of legal claims. Look into different kinds of small business insurance like general liability insurance, professional liability insurance, and product liability insurance.

Train your employees

Employees who know how to do their jobs properly and understand your company’s policies are less likely to cause issues that could lead to legal problems. Provide regular training in safety and compliance.

Handle disputes proactively

Try to address complaints and disagreements internally before they escalate to lawsuits. Methods like mediation or arbitration can help solve disputes without going to court.

Consult legal professionals regularly

Regular advice from a lawyer who knows your industry can help you avoid many legal problems. They can give you specific advice and help you understand complex issues.

How to identify your business’s litigation risks

Identifying the risks of getting into legal trouble for your business involves looking closely at different parts of how you operate. Here’s how you can identify your own small business’s litigation risks:

Review your business operations

Look at everything your business does, from selling products to dealing with customers and managing employees. Think about what could go wrong in each area. For example, poor customer service practices could result in customer complaints or lawsuits, or if you don’t treat your employees fairly, it might lead to disputes over wrongful termination or discrimination.

Analyze any past incidents

Review any legal issues your business has had before. Look at what happened and see if there are any patterns. For instance, if you’ve had trouble with suppliers not delivering what they promised, you might need to find new suppliers or change your contracts.

Review your contracts

Go over all the contracts your business has signed with customers, suppliers, landlords, and employees. Pay attention to what’s written in these contracts and any disagreements that might come up so you can fix any issues before they become bigger problems.

Evaluate compliance requirements

Check that your business is following all the laws and rules that apply to it. This means things like paying your employees fairly, keeping your workplace safe, and following any industry-specific rules. If you’re not sure, get some advice or do some research to make sure you’re doing things right.

Consider industry-specific risks

Some businesses have more risks than others because of the type of work they do. For example, businesses in highly regulated industries such as healthcare, finance, or food service might get watched more closely and have to follow more rules. Also, businesses that deal with intellectual property, such as technology companies or creative agencies, may face risks related to copyright or trademark infringement.

Conduct a financial risk assessment and analysis

Consider the potential financial impact of legal disputes on your business. While this includes paying lawyers, settling claims, and paying for any damages, it also means thinking about other costs, like how your business’s reputation might suffer, how you might lose customers, or have trouble running your business. Conduct a financial risk assessment and analyze how much each type of legal dispute could cost you, so you can focus on preventing the ones that could hurt you the most.

Develop a risk management plan

Once you know what risks your business faces, create a comprehensive risk management plan to address them. This plan should outline specific measures and strategies to prevent, mitigate, or manage legal risks. This might include implementing new policies and procedures, getting additional insurance, or seeking legal advice when needed. Keep reviewing your plan and updating it as your business grows and things change.

Seek professional advice

If you’re still unsure about your business’s risks or how to address them, consider seeking advice from legal professionals who specialize in business law. A qualified attorney can provide valuable insights and guidance tailored to your specific industry and circumstances.

How does having insurance help mitigate litigation risk?

Having insurance can help small businesses by paying for legal expenses when facing a lawsuit or legal claim. If your business is sued, the insurance can cover legal fees, court costs, settlements, and damages, which can be very expensive. This means you don’t have to pay for these costs out of pocket. Having the right small business insurance gives business owners peace of mind and lets them focus on running their business(es) without worrying about legal problems.

FAQs

What are potential litigation risks?

Potential litigation risks are things that could lead to your business being sued, like unhappy customers, contract disputes, or not following the law.

How do you manage litigation risk?

To manage litigation risk, you should understand the law, have clear contracts, follow rules, and be careful about what you say and do in your business.

What is audit litigation risk?

Audit litigation risk is the risk that a company’s financial statements could be challenged or disputed, leading to legal action, often related to audits performed by accounting firms.

What is the most common type of legal risk?

The most common type of legal risk for businesses often involves contract disputes, where parties disagree about what they agreed to in a contract.

Working in the construction sector involves countless safety concerns, especially when you’re on a job site during the summer months when outdoor temperatures call for prolonged, and extreme heat waves.

Whether you’re working with skilled tradespeople or new employees, protecting construction workers under your care and on your job site is essential, as unsafe conditions can put your business operations and interests in jeopardy.

If you’re the owner of a construction business or contracting company, take note of these safety tips and practices to ensure you’re able to prevent heat stroke amongst your workforce and uphold occupational safety standards on your construction site.

Why is working in the heat on a construction site risky?

Construction jobs are already physically exhausting and risky. This risk is heightened when workers are made to work in scorching temperatures for long periods of time, given that heat can accelerate and worsen this exhaustion.

This is why it’s crucial that construction and contracting companies actively protect their workers from heat-related illnesses during the summertime as it can significantly threaten all members of your team. However, with the right safety tips and practices, you can protect your team and prevent heat-related hazards on site this summer.

The early signs of heat related illnesses

Prolonged heat exposure can cause significant health hazards, especially to new workers. Without the proper precautions and safety training, heat related illnesses can go undiagnosed until it’s too late.

To ensure you’re protecting workers and avoiding project delays, take a closer look at some of these early symptoms of heat illness:

1. Heat cramps

These types of muscle spasms are usually experienced in the legs, arms, or stomach area.

2. Heat exhaustion

Beyond cramps, another type of heat illness that’s common is heat illness (exhaustion). Here are some signs to look out for:

Increased sweating

Construction workers may experience increased sweating, accompanied by clamminess and feeling cold at the same time.

Weakness throughout the body

The individual may also feel weak or unusually tired following long periods of high temperatures.

Feeling dizzy or disoriented

They could feel dizzy as well as disoriented.

Nausea or vomiting

Having an upset stomach, feeling nauseous, or vomiting can also happen when the body is overheating.

Pale-looking skin

The skin can appear pale and clammy.

Increased pulse

A fast, yet weak heartbeat is another response to heat stress throughout the body.

Headache

Heat can also cause workers to have headaches.

2. Dehydration

Symptoms of being dehydrated include dry mouth, excessive thirst, increased urination, and lightheadedness.

Heat rash

A heat rash is another type of heat illness that can blister the skin.

What sunscreen do construction workers use?

UV protection is incredibly important during the summer months when there’s an increased chance of being exposed to high temperatures and direct sunlight for long periods of time.

Without UV protection and the right protective gear, your workforce is at risk of severe sunburns that could eventually turn into cancer later down the line. To protect workers in hot environment settings, make sure any exposed skin has at least 30 SPF sunscreen on it, specifically the face, neck, arms, hands, and lips.

You’ll also want to make sure that the sunscreen is waterproof, to ensure it remains intact, should your construction workers begin to sweat.

How do you beat construction heat?

To beat and prevent heat-related illnesses on your construction sites, it’s important that you familiarize yourself with these safety tips and safety practices:

• Drink water frequently: Make sure all workers on your construction site have unlimited access to cool water throughout the day. You should encourage them to drink water every half an hour or so, not only when they feel thirsty. This will help prevent the risk of dehydration.
• Wear breathable clothing: Tell your workers to wear loose-fitting, breathable materials. Light colors work best as they do not absorb as much as black clothing materials.
• Take regular breaks: Make sure your workers are allowed regular breaks throughout the day in an area where they can cool down, preferably one that has air conditioning, if it’s accessible. Otherwise, a shaded area with working fans is suggested.
• Wear sunscreen: Have workers apply SPF 30 to all areas of their skin that is not covered by the appropriate protective gear.
• Don’t forget your sunglasses: Safety glasses and sunglasses are also needed as UV rays can affect your eyes and lead to damage over time without the proper protection.
• Set up a shaded area on your construction site: Like we mentioned above, ensure that your job site has a shaded area where construction workers are able to cool off during their breaks.
• Train your employees: Lastly, don’t forget to educate all of your trained workers about the risks of prolonged exposure to heat and hot temperatures. Safety practices should include how to respond to emergency health scenarios and how to identify signs in other employees.

Remember, training workers and ensuring they actively understand and implement safety practices on construction sites helps keep everyone at the job site safe when using heavy equipment, complex tools, construction materials in direct sunlight for hours on end.

How can you be safe on a construction site?

The construction industry as a whole, including individual construction sites, involves many different risks. To guarantee safety and protect your workers on the job, here’s what you should be doing:

Ensure all employees where appropriate personal protective equipment (PPE)

All individuals on the job site should be wearing personal protective equipment at all times. This could include hard hats, safety glasses, gloves, reflective vests, steel toe shoes, and other safety gear that is unique to the type of job at hand.

Safety training is a must for all of your workforce

All workers you hire for the job should receive thorough training on any related safety protocols, proper use of equipment, and emergency procedures should anything go wrong. It’s also important that you uphold your commitment to ongoing training for your workers.

Have the right signs posted on your site

Always make sure that you have signs posted around your construction site that suggest any hazards and of course, related safety instructions.

Keep your job site as clean and organized as possible

Ensure your job sites are free of any hazards that could lead to injuries like tripping over objects, heights, electrical wires, and more. Tools and equipment should be stored correctly,

Use tools and machines with care

Only trained workers should operate machines on your job sites. For the protection of your team, you should also keep equipment and machines well-maintained to ensure they work correctly.

Maintain open communication lines with your team

Give your team communication tools that allow them to get in contact with anyone on site at any time, without any delays. This can be especially important during emergencies where time is of the essence.

Be cautious of heights

If your team is working at elevated heights, you need to make sure that you have secured scaffolding in case of high winds, fall gear, and other protection equipment to maintain the safety of your team at all times

Prepare for emergency scenarios

Implement an emergency plan amongst your team that everyone knows and understands thoroughly. You should review this emergency plan on a regular basis to avoid miscommunications amongst workers.

What measures do you take to prioritize safety on construction sites?

To ensure construction sites are safe, businesses need to prioritize safety and construction practices at all times. Safety measures could include:

1. Clear safety expectations: Create detailed and documented safety policies that deal with all aspects of your work. Make sure workers have access to these policies and that you strictly enforce safety measures at all times. 
2. Conduct safety inspections: Check the job site and any machinery on a regular basis to find and fix any possible safety issues. These inspections should be done by site managers and consequences should be made clear if workers are blatantly ignoring safety protocols.
3. Have a safety reporting system: A primary cause of safety hazards is unsafe working environments that go unnoticed. So, make sure you have a system in place that allows your workers to report unsafe scenarios and conditions on your job site. Remember, the protection of your workers is key, and they should be able to report any hazards easily, at any time.

Furthermore, if you’re unsure about how you can maintain a safe construction site, look to your provinces health act for further safety tips related to the unique needs and hazards of the construction industries, projects, and work environments for further information.

Work in the construction industry or as a contractor? Get customized insurance protection from Oracle RMS

The potential hazards associated with construction work is all the more reasons to make sure you have the right contractors and construction insurance.

Oracle RMS is a leading brokerage with over 40 years of industry experience. Our team of experienced brokers work with some of Canada’s top insurance carrier companies, enabling them to customize your policies depending on your unique needs as a business.

Don’t delay insuring your construction company and your job site, get a free online contractors and construction insurance quote with Oracle RMS, today!

Purchasing a high-end vehicle is an important milestone — a testament to the culmination of hard work and dedication. However, the latest data indicates that high-end vehicle owners need to be proactive when it comes to protecting their car. According to industry data from the Insurance Bureau of Canada, a vehicle is stolen every 6 minutes in Canada, representing an estimated $1 billion annual price tag for Canadians.

With vehicle theft on the rise in Ontario and the rest of the country, it is important to take as many precautions as possible to protect your hard-earned asset. In this article, we delve into some of the solutions you can implement to ensure you’re able to enjoy your high-end vehicle ownership without the constant fear of losing what you’ve worked so hard to attain.

Anti-Theft Devices for your Vehicle

These devices are intended to make it more challenging for thieves to steal a vehicle. Here are some anti-theft devices you can purchase to protect your car:

• Steering wheel locks: these adjust to fit most steering wheels, and can be easily locked and unlocked with a key.

• Brake locks: these attach to the clutch or brake pedal and are then locked in place with a key.

• Immobilizers: these disable the engine by disconnecting the starter, ECU fuse, or fuel pump.

Anti-Theft and Recovery Systems

In the case that your car is stolen, an effective recovery system will dramatically increase your chances of getting your vehicle back before it is too late. The Tag System is an anti-theft recovery system that has been extremely successful at tracking down and recovering stolen vehicles across the United States and Canada.

The installation of the Tag system, which only takes one hour to complete, will protect your car by ensuring that it can be tracked at any time in the event of theft. A small Tag logo etched on your vehicle’s windows serves to deter thieves by alerting them that your car is being protected by the Tag system.

A high theft vehicle surcharge is now being implemented by most insurance carriers that applies to  select vehicles that are at increased risk of theft based on year, make and model. To learn if your vehicle is at an increased risk of theft and will qualify for this premium surcharge please contact one of our Oracle RMS brokers today. They will be able to tell you whether you can be exempt from this surcharge by installing the Tag system.

At Oracle RMS, we remain committed to partnering with insurance providers that strive to protect our clients innovatively. To learn more about Tag offers from your insurance carrier you may be eligible for, contact one of our brokers today by sending an email to info@oraclerms.ropstam.dev or calling us at 905- 660-9740.

Another anti-theft system you can opt for are the IGLA Anti-Theft devices, which allow you to use your vehicle’s existing buttons to authorize your vehicle to start. The code entered into your vehicle is a unique code that is chosen by you.

Everyday Measures to Prevent Theft

One of the easiest ways to prevent theft is to park your vehicle in ways that make it harder for a thief to steal it. Make sure to turn your wheels toward the curb to make it harder to tow away. Depending on the type of car you own, you will want to park differently:

• If you have a rear-wheel-drive car, back into your spot.

• If you have a front-wheel-drive car, park facing forward.

If you can, always park your high-end vehicle in well-lit, busy areas with high foot traffic. Use secure parking facilities whenever possible, and avoid leaving your vehicle in isolated or poorly lit areas.

It’s also important to be mindful of where you keep your keys. You should avoid leaving them in obvious places, such as on a key hook near the front door. Consider using a signal-blocking pouch or box to prevent relay attacks on key-less entry systems.

Finally, be careful of what you say on social media. You might be tempted to share pictures of your vehicle online to celebrate the purchase. However, this information can be used by criminals to target your vehicle. Likewise, avoid posting specific details about your high-end vehicle such as its location, or your travel plans.

The Ideal Insurance Coverage for your Vehicle

Have you ever wondered what kind of insurance coverage you need to protect yourself against car theft?

Comprehensive insurance coverage, which is an optional auto insurance coverage that protects the insured’s vehicle in the event of damage not caused by a collision.

In addition to protecting you if your vehicle is stolen, comprehensive insurance covers damage caused by things like fire, vandalism, extreme weather and falling objects.

Choosing the right kind of insurance for your vehicle can be a daunting task at times. Fortunately, our licensed insurance brokers at Oracle RMS are experts at finding tailored car insurance solutions that will cover your every need. Request your quote here today.

In the world of health and fitness, professionals are in the business of improving and maintaining the physical health of their clients. Yet, just as in any other profession, there’s always the potential for unforeseen events, accidents, or misunderstandings that can lead to financial or legal disputes. To safeguard themselves, professionals often turn to liability insurance, specifically designed for those in the health and fitness industry.

What is health and fitness practitioner liability insurance?

Health and fitness practitioner liability insurance is a specialized type of insurance designed to protect professionals in the health and fitness industry against potential legal claims arising from their professional services. This insurance protects practitioners from the financial consequences of lawsuits or claims made by clients or third parties due to perceived negligence, errors, omissions, or accidents that occur during the course of providing services. The primary purpose of this insurance is to shield professionals from potentially crippling financial losses that can arise from lawsuits or claims.

Health and fitness liability insurance generally includes professional liability insurance and commercial general liability insurance. It may also include commercial property insurance and/or rental damage protection for professionals who own or rent spaces or facilities for conducting classes or sessions. In addition, it can include product liability insurance to protect fitness professionals who sell or promote certain products.

​​What is professional indemnity for fitness instructors?

Professional liability insurance, also known as professional indemnity insurance or, more often, errors and omissions insurance, is designed to protect professionals from claims related to their advice or services. For fitness instructors, as well as personal trainers, this could cover situations where a client claims that the guidance or instruction given led to an injury or did not produce the promised results.

For example, imagine a scenario where a participant in a high-intensity interval training (HIIT) class claims they injured their back due to improper instruction. If the participant decides to sue the instructor, professional liability insurance will cover the legal fees, settlements, or any awarded damages up to the policy’s limit.

This type of insurance provides peace of mind and reinforces the instructor or personal trainer’s professional reputation, assuring clients that they are taking their safety and well-being seriously.

What level of professional liability coverage is required for a boxing center?

Boxing centers, given the nature of the sport and training involved, have a heightened risk when it comes to potential injuries. Therefore, their insurance requirements may be more extensive than those of a standard gym or fitness center.

While the exact amount of coverage needed varies based on the location, size, and clientele of the center, it’s often recommended for boxing centers to have a minimum coverage between a minimum coverage between $1,000,000 to $2,000,000 per occurrence. Some high-profile or larger centers might opt for even higher limits.

Other factors influencing the required coverage level include the specific services offered (e.g., professional boxing training vs. cardio boxing classes), the number of trainers and students, and any additional amenities or equipment that might pose potential risks.

As always, consulting with an insurance professional or legal advisor is essential to determine the precise level of coverage suitable for a particular boxing center.

Do professional MMA instructors need a different type of liability insurance?

Yes, professional MMA instructors typically require specialized liability insurance due to the high-risk nature of mixed martial arts training. MMA is an intense, full-contact sport that combines techniques from various martial arts disciplines. The very essence of MMA training – striking, grappling, and submissions – naturally comes with a heightened risk of injuries, ranging from minor bruises to more severe issues like concussions or bone fractures.

In addition, MMA instructors don’t just teach fight techniques. They may also provide guidance on strength training, conditioning, nutrition, and mental strategies. A broader scope means a wider range of potential areas where something could go wrong, leading to claims of negligence or malpractice.

So, while standard fitness instructor liability insurance offers a degree of protection, it may not comprehensively cover the unique risks associated with MMA training. Specialized liability insurance, such as an MMA-specific liability insurance policy, can be tailored to the intricacies of the sport, ensuring that instructors are adequately protected against potential legal claims.

Do self-employed fitness instructors need insurance?

Absolutely. Whether employed by a gym or operating independently, fitness instructors are exposed to liabilities. In fact, self-employed instructors might have a heightened need for insurance as they may not have the backing of a larger organization in the event of a claim.

Moreover, having insurance can also be a selling point for potential clients, showcasing the instructor’s commitment to professionalism and client safety. It’s a small investment that provides both peace of mind and professional credibility.

Final thoughts

Health and fitness practitioner liability Insurance is a cornerstone for anyone operating in the fitness industry. Whether you’re leading a group aerobics class, providing one-on-one personal training sessions, or running a boxing center, Oracle RMS will ensure you have the right insurance coverage so you can focus on what you do best: helping clients achieve their fitness goals.

Get your Fitness Practitioner insurance quote today and secure your peace of mind.