The uncertainty of economic downturns is often seen as a cyclic elimination of inefficient businesses and as a chance to expand market shares relinquished by weak competitors. Companies that weather tough times relatively unscathed could still find themselves facing uninsured risks in the long term. Use these tips to keep your business prospering into the next economic cycle.
About Your Partners
It’s no secret that the financial security of your business hinges on that of your partners and suppliers. But, never rely on the insurance cover of your business partners to protect your assets or protect against third-party liability claims. In the event of financial insolvency, a company’s partner organisations could be held liable for claims filed against it. Even healthy, well-insured partner organisations are no substitute for comprehensive liability cover for your business.
To protect your company, it may be a wise investment to expand your cover limits. While it may be tempting to cut costs by limiting cover, you could risk paying out of pocket for hefty claims or settlements. An important way to protect your company from the cost of speciality trade contractor failure is to transfer the risk of project completion through surety bonds.
Secure Seamless Contracts
In a turbulent economic climate, it is important to have seamless contracts that outline party obligations and discuss resolution policies so that if something goes wrong, you avoid a messy disagreement. It is never a good business decision to sign a contract hastily—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.
Exploit Change with Caution
For many construction companies, change is the best way of reacting to an economic crisis. Offering new services or exploring different customer bases can be a crucial factor in surviving difficult economic times. While expanding in either of these ways can revolutionise 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 liability claims. You may want to consider purchasing additional lines of cover to protect yourself, as your surplus lines insurance policy may only cover claims arising from existing projects or services.
Unexpected Consequences of Economic Downturn
Similarly, shifting or expanding your customer base may put you at risk of unexpected legal actions. The same product or service may evoke disparate reactions in different sectors of the market.
This is another instance in which it is important to be covered for liabilities resulting from a change in your business. Contact Safe & Insured today to be sure your plan for escaping the economic downturn unscathed does not backfire.
The content of this publication is of general interest and is not intended to apply to specific circumstances or jurisdiction. It does not purport to be a comprehensive analysis of all matters relevant to its subject matter. The content should not, therefore, be regarded as constituting legal advice and not be relied upon as such. In relation to any particular problem which they may have, readers are advised to seek specific advice from their own legal counsel. Further, the law may have changed since first publication and the reader is cautioned accordingly. © 2007-2010, 2012-2013 Zywave, Inc. All rights reserved.