An economic downturn often strikes worry among business owners and their employees in virtually every industry. Even companies that escape tough times relatively unharmed could still fall into the trap of uninsured risks long term, so TPG Insurance Services has compiled these tips to keep your business prospering.
This Risk Insights is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.
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The Chain Reaction
It’s no secret that the financial security of your business hinges on that of your partners, vendors and suppliers, and that in tough times, everyone is looking for a way to cut costs.
Never rely on the insurance coverage of your business partners to protect your assets or protect against third-party liability claims. In the event of supplier bankruptcy, partner organizations could eventually be liable for claims.
Ultimately, in order to protect your company, it may be a smart long-term investment to expand your coverage limits. Many businesses are trying to cut costs by lowering their coverage, but you do not want to pay out of pocket for an expensive claim laid on your shoulders because of your suppliers’ shortcomings. If you are involved in outsourcing or are considering this option to mitigate costs, first talk to TPG Insurance Services about covering the associated risks.
Shaky Contracts Make for Shaky Business
In a turbulent economic climate, it is extremely important to have thorough, seamless contracts. They should clearly outline the obligation of each party and discuss dispute resolution policies so that if something goes wrong, you avoid a messy and expensive disagreement.
It is never a good business decision to sign into a contract hastily, but especially in a difficult economic time, be sure to look into all the risks and legal ramifications. Small companies who partner with larger companies are often strong-armed into making decisions with which they are not completely comfortable.
During an economic downturn, the financial security of your business hinges on that of your partners, vendors and suppliers.
Be Cautious With Change
For many businesses, change is an intelligent way of reacting to an economic crisis. It allows you to explore new customer bases and offer additional products or services. While expanding in either of these ways can revolutionize your business and keep you afloat in tough times, it could also expose you to additional liability you had not dealt with before.
When you experiment with new products or services, you will inevitably face a learning curve, which puts you at a larger risk of facing product liability claims. You may want to consider purchasing additional lines of coverage to protect yourself, as your surplus lines insurance policy may only cover claims arising from one particular product.
By the same token, shifting or expanding your customer base may open you up to class action lawsuits. You are not changing your product or service, but you are tapping into another market that may react differently to product failure. This is another instance in which it is important to be covered for potential liabilities resulting from a change in your business. Contact TPG Insurance Services today to be sure your plan for escaping the economic downturn unscathed does not backfire.