Ahoy, there! Navigating the high seas of business risk is never easy, even with a compass. Throw in a Kraken-sized customer injury, and your business may find itself drowning in lawsuit costs.
Take the recent case brought against Holland America Line cruises for example. According to The Seattle Times, James Hausman took a cruise on a Holland America liner in 2011. Hausman was reportedly injured while walking through an automatic sliding-glass door on the ship, and he now suffers from memory loss and seizures.
The result of the case? The report notes Hausman was awarded a dizzying $21.5 million in damages, including…
- $16.5 million for punitive damages against Holland America.
- $5 million for past and future pain, suffering, and emotional distress.
That's enough to make any business owner feel seasick.
A cruise ship is by no means a small business, but the lessons here can still apply. Let's dive in and learn how a similar incident may happen at a small business.
General Liability Lesson #1: Injuries Can Happen Anywhere
Whether you're cruising across the ocean blue or stopping into a hardware store to buy glue, an injury can find you. The same is true for your customers. The difference? If you're injured at your store, it's your problem. But when a customer is injured on your business property, it's also your problem.
For example, say a customer slips and falls on a puddle of water at your store. Sure, their injury may not result in a million-dollar lawsuit like the Holland America Line example (turns out the liner had a history of injuries across several liners – see Insurance Journal's report for the finer points). But it could result in, say, a $100k lawsuit.
So long as that slip-and-fall accident happens in your store, you may be responsible for the financial fallout.
General Liability Lesson #2: Lawsuits Take Time and Money
When an injured customer files a lawsuit, there's money leaking from your business before it even goes trial. For example, you may have to:
- Hire a lawyer.
- Take time off work to meet with said lawyer.
And if the case goes to trial, you may be bailing water from your floundering bottom line. Lawsuits can take months or years to resolve, racking up legal bills along the way.
The good news? In an injury lawsuit, a small business would likely have fewer assets on the line than a large cruise line. That means the damages would also be smaller. Incidentally, this is why the typical Commercial General Liability Insurance policy has an occurrence limit of $1 million. (Learn how to decipher insurance lingo in "Decoding Your Small Business Insurance Quotes.")
Customer injury lawsuits are just one of the many reasons why it's wise to invest in General Liability coverage to help keep your business afloat during dire straits. Remember, General Liability Insurance may pay for attorney fees, legal costs, and settlements or damages. It can also can help pay for immediate medical costs (e.g., an ambulance ride) if a customer or other third party is injured on your property.
If you don't currently have a General Liability policy, now is a good time to shop (as we learned in the post "Procrastinators, Rejoice! Insurance Prices Continue to Fall"). By carrying the appropriate coverage, your business can experience smooth sailing even when disasters strike.