Gawker reported this week on a Washington state Supreme Court decision that could send the chills down the spines of business owners. Apparently, the court ruled that a person injured in a car crash with a utility pole has the right to sue Skagit County and the local utility company Puget Sound Energy for placing that pole too close to the road.
Sounds fairly reasonable, right? Well consider this: the reason for the suit was that a drunk driver with a BAC of .14 (the legal limit is .08) hit the pole and injured her passenger. And the court ruled that the passenger can still sue the county and the utility company – which means they might be held liable for some of the damages.
Your Liability Is Greater than You Think
If you're like most small-business owners, you may never have thought about what your legal liabilities are. You probably started your business to pursue a passion, serve an unmet need in your community, or make money on something you were already doing in your spare time.
But as a business owner, you could be held liable (that is, legally responsible) for a number of incidents, including…
- Injuries that happen to people on your premises. So when a client slips in your store and breaks a wrist, she could take you to court. And she could win your money.
- Injuries that happen to people who buy your products. Say a client manages to make it out of the store without any major injuries, but gets home and is zapped by the toaster you sold him. Even though you didn't manufacture the toaster, you could be held partially liable for damages as someone profited from the sale.
- Injuries caused by people you served alcohol. Own a restaurant or bar? Depending on where you live, you might be exposed to liability for acts committed by people you served booze – even if those acts are committed after they leave your premises. Laws that permit this transmission of liability are called dram shop laws. Check to see whether they exist in your state.
And just so there's no confusion, “liability” most often translates to paying money. So if you're found liable for injury or damages, there's a good chance you'll face a fine or penalty to compensate the injured party.
How to Cut the Costs of Liability
The good news? The whole point of business insurance is to cover the costs associated with legal liability. So when you have adequate insurance in place (say, a Liquor Liability policy or General Liability coverage), you don't have to worry about paying your liability costs out of pocket. Instead, your insurance premiums cover those costs so you can keep funneling your money into growing your business. Whew.