Running a healthcare business can be difficult, especially when you have people’s health in your hands. One of these risks is the potential of a lawsuit targeting the business. Lawsuits can emerge from misunderstandings or legitimate wrongdoing, but no matter what the cause is, small business owners must take steps to mitigate this liability. Investing in professional and management liability insurance is one of the most effective strategies, and there are several other steps entrepreneurs can follow to protect their businesses and assets.
What a Healthcare Business Should Do
If you offer business liability insurance to clients, you can help them avoid lawsuits by providing the following advice.
Hire a Skilled Lawyer for the Healthcare Business
Keeping a lawyer on retainer is an effective defense against the potential threat of a lawsuit. Many small businesses may need help to afford this, but hiring a lawyer for legal counsel may still be helpful. A lawyer can help a small business owner identify potential exposures and develop a risk management plan. A lawyer may also help small business owners decide whether general liability vs. professional and management liability insurance is appropriate.
Choose a Legal Business Structure
Small healthcare business owners should also feel encouraged to establish a legal structure for their business. Operating as a sole proprietorship might entail minimal risk for some entrepreneurs, but businesses that hire staff and interact with customers must be more cautious. A structure such as a limited liability company (LLC) will separate a small business owner’s assets from the assets of their business. It might make a lawsuit less lucrative and thus discourage any overly litigious individuals from filing suit.
Create Distance Between Business
Creating a business structure is the first step toward defining a business, but small business owners should take further action to separate themselves from their company. Failure to do so could cause business and personal expenses to become intertwined, and this may result in legal ramifications — or a lawsuit — if a small business owner is held liable for damages. Entrepreneurs can distance themselves from their businesses by establishing a legal structure and ensuring their personal finances are separate from business finances.
Maintain Thorough Documentation
Finally, small businesses can minimize the risk of a lawsuit by maintaining thorough documentation of all transactions and processes. Documentation is an entrepreneur’s best friend when it comes to limiting liability because it can be used as legal evidence against a claim that’s made in a lawsuit. If a potential litigant knows that a business can easily disprove its claim, they’re far less likely to initiate legal action in the first place. Businesses should retain all receipts, contracts, and other vital documents. Also, they could digitize these files to store them later for reference with no issues.
About Connected Risk Solutions
At Connected Risk Solutions, we use our expertise and experience to provide insurance information and programs to those who serve long-term care and senior living facilities. Since 2007, we’ve been offering insurance and risk management plans designed to help our agents give their clients the ability to achieve continued growth while simultaneously protecting against loss, containing costs and increasing profitability. With three offices to serve you in Chicago, Illinois; Phoenix, Arizona; and Burlington, Connecticut, we do everything we can to make your experience with us as professional and transparent as possible. To learn more, contact us at (877) 890-9301.
