While attention to quality control and seamless risk management procedures can reduce the risk of lawsuits, no organization can completely eliminate the possibility that a claim will arise. Litigations, even the most ludicrous pursuits, can lead a company down a path of financial disaster.



Businesses can prevent this financial pitfall by arming themselves with company liability insurance. In fact, operating a business without coverage, particularly in the information technology industry, can create a highly volatile situation for the organization. Still many businesses and individuals go without liability insurance to cut down on operating costs, but it only takes one claim to wipe out what took years to build. Without liability insurance, the business can take a major hit from the litigation process and the owner's personal assets can become vulnerable.

In 2007 alone, according to the Bureau of Labor Statistics, there were more than 335,000 cases of employees injured on the job due to contact with objects and equipment. Employer's Liability insurance protects companies from an employee's claim that their illness or injury was caused by the company's alleged negligence or failure to provide a safe workplace. This coverage will not only pay for damages resulting from a lawsuit, but also for the defense costs including, attorney fees, research fees, court reporting fees and witness fees, to name a few. In some instances, legal defense costs can substantially surpass the actual damages.

General Liability insurance is typically the first line of defense against common claims. It protects businesses against claims of bodily or other physical injury as well as property damage. A General Liability insurance policy will most likely include:

* Personal and Advertising Injury ? protects against offenses committed by the company or employee such as libel, slander, disparagement or copyright infringement in advertisements.

* Defense Costs ? covers legal defense costs for liability claims regardless of who is at fault.

* Medical Expenses ? covers medical expenses if someone is injured due to an accident on the business's property.

* Premises and Operations Liability ? covers the business on claims of bodily injury and property damage inflicted by others on the business's property or as a result of the business's operations.

Premiums on General Liability insurance are typically low, and usually are not enough to dissuade a business from purchasing it. The cost, however, of operating without liability insurance can prove to be much more extreme. Legal fees alone, regardless of whether the claim is deemed valid or not, can damage a company financially. Company liability insurance can preserve a business's assets and allow them to continue operations even during a lawsuit.