Premises Liability Insurance Basics for Small Business


Premises liability lawsuits are on the rise and no business is immune. The most common lawsuits involve “slip and fall” accidents. The most common cause is spilled liquids or other materials that fall on the floor where someone can trip over or slip on them. Slip and fall accidents primarily take place in grocery stores and retail establishments, but they can happen anywhere, like shopping center parking lots apartment complex courtyards, hotel lobbies and hallways, for example. In addition to slips and falls, your small business is liable for accidents resulting from fires, falling objects, dangerous equipment, even assaults that take place on your business premises. Premises liability insurance, typically part of a commercial general liability policy, is your first line of defense.

Some premises liability suits are legitimate, but many are frivolous or even fraudulent. Insurance companies and their defense lawyers are trained to spot the phonies, and the cost of investigation and defense is part of your business liability insurance coverage. But you can and should take steps to prevent accidents and avoid being a target.

Most states require that you, as the business owner, exercise reasonable care to protect customers and visitors from injury by keeping your property in safe condition. In general, you can’t be expected to protect people from hazards that are obvious, hidden or unknown. But, and it’s a big but, a plaintiff’s attorney may effectively argue that the hazard wasn’t all that obvious, or a jury may find that you should have been aware of the hidden danger. That’s where the reasonable care comes in. Here's what you can do.

  • Write a maintenance procedural that includes a routine schedule to check for hazards and defects that could cause an accident. Keep a written record when something is repaired or replaced. This can go along ways toward showing that you’re conscientious.
  • Train your managers and employees to be on the lookout for potential hazards. Be sure they know the policy for reporting a problem, fixing it if possible, and alerting customers to avoid it until it's fixed.
  • Install security cameras where feasible and post visible notices that the cameras are in place.  Knowing they are being recorded could discourage scammers.
  • Make sure parking areas, entrances, aisle and hallways are well lit.
  • Review your business liability insurance periodically. As your business grows, consider increasing your commercial liability coverage.  
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