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SoHo NEWS & TIPS
Helping You Make the Most of Your Small Office/Home Office
SoHoTIPS.com
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Greetings,
Below is an article regarding insurance, informational to
small businesses without it. Would you survive being
sued without insurance? No one is safe from legal liability,
you must weigh the insurance costs versus the assets you
could potentially lose, along with the reassurance of simply
being insured. However, shop carefully!
Best,
Mandi
P.S. You can discuss this issue or any other topic in the
new SoHo News & Tips forum. Check it out here...
SoHo News & Tips Forum
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NEWS & TIDBITS
- No. 1 Internet search-engine operator Google Inc. has
purchased JotSpot, one of the first providers of collaborative
online tools known as wikis meant for use by corporations,
according to an announcements on the official Google and
JotSpot Web site.
- Sony, the Japanese electronics giant, said that it was
being investigated by the United States Department of Justice
for possible antitrust violations related to its memory-chip
business.
- Microsoft Steps Up Anti-Piracy by preparing 55 legal
actions worldwide against sellers on auction sites who are
hawking illegal copies of the company's software.
- Photography company Eastman Kodak Co. posted smaller third-
quarter and said its quarterly loss narrowed from a year
earlier, when it took a $778 million tax-related charge, and
revenue fell as traditional film sales declined 19 percent.
- Procter & Gamble Co. posted a better-than-expected 33
percent jump in quarterly profit and the company slightly
raised its full-year view due to easing commodity and energy
costs. But the high end of P&G's profit view for the current
quarter just meets the average forecast already expected by
Wall Street, and P&G shares slipped as much as 2 percent before
staging a bit of a rebound.
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What if You Get Sued? A Look at Insurance
By Kelly Spors
It's not difficult to see why many self-employed individuals,
from the independent consultant to the professional dog
walker, find it unnecessary to buy liability coverage.
Besides the high price, some business owners don't think
they're vulnerable to lawsuit or fear that having a deep
pocket of insurance might entice customers to sue.
But weigh those reservations against a much scarier
alternative: What if you get sued without it? You risk losing
your business, and possibly even personal assets depending on
the firm's structure and how well it's maintained.
Liability insurance typically pays judgment money and legal
fees if you're sued for anything related to your business
activity -- ranging from someone injuring themselves on your
property to a client feeling that you doled out damaging
advice. Several types of insurance exist. Professional
liability covers negligence, errors and omissions that arise
out of service provided by your practice.
Of course, the policies come with exclusions you must read
carefully, and coverage isn't cheap. Firms with annual
revenues of $200 million or less paid an average $3.29 for
every $1,000 in revenue for general liability insurance in
2005, according to a survey by broker Marsh Inc., a unit of
Marsh & McLennan. However, premiums vary widely depending on
your business type and the lawsuit risks in your industry. A
one-person business with low claims risk and no prior loss
experience could pay about $5,000 annually for a $1 million
primary liability policy that includes professional coverage,
says George Pallis, Marsh's managing director.
Assuming you're immune from legal risk can be a dangerous
game. Firms, large and small, are frequently sued for what
sometimes may appear a frivolous or unjust claim. The average
jury award to plaintiffs in injury and liability cases in 2004
was $1.39 million, up from $602,000 in 1998, according to the
Insurance Information Institute, a trade group.
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Sole proprietors, comprising about 70% of all U.S. businesses,
especially need liability coverage because no separation
exists between their personal assets and business assets.
Their home, their car and their personal investment accounts
are threatened by any lawsuit stemming from their business if
they're not insured.
An incorporated business generally shields personal assets from
the business's assets, meaning insurance may be less necessary.
But there's still a small chance that a lawyer can pierce that
protection by convincing a judge your business wasn't follow-
ing corporate procedures, says the insurance institute's chief
economist, Robert Hartwig. And, even when incorporated, all
your business assets are still up for grabs if someone sues
you.
Incorporated or not, there are other compelling arguments to
get insurance. You alluded to one yourself. Many clients
prefer, or demand, the consultants they hire carry insurance,
says Elizabeth Gaudio, senior executive counsel for the
National Federation of Independent Business, a small-business
lobbying group. So you may sacrifice some income by forgoing
coverage. A 2002 survey by the federation found that 67% of
small firms purchased professional liability coverage.
All that said, a financially strapped business owner with few
personal or business assets probably doesn't need insurance
until there are assets to protect, says James Lange, a
Pittsburgh tax attorney. "If he's 23 years old, has thousands
of dollars in student loans and has this fledgling business,"
there's little to lose, Mr. Lange says. It comes down to
weighing the insurance costs versus the assets you could
potentially lose, along with the reassurance of simply being
insured.
If you do decide to buy liability coverage, shop carefully.
Some policies only cover current policyholders, while others
will cover events that occurred while you were insured, even
after you've ended coverage, Mr. Hartwig says.
From the Wall Street Journal Online
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DID YOU KNOW?
It is a good idea to get to know several loan officers at your
branch, so that if your main contact leaves, you don't have to
start from scratch getting to know someone else. These days,
people don't stay at one job very long, so it's likely that by
the time you're ready to apply for a loan, your original loan
officer will be working somewhere else. It is also a good idea
to get to your loan officer's boss. Positive strokes to a boss
even works for bankers.
So what did you think about this issue? Drop me a line and let
me know at mailto:mandi@gophercentral.com
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