As the saying goes, an entrepreneur will work 18 hours a day for themselves in order to not work eight hours a day for someone else. Small and medium-sized business owners are risk takers and dreamers; they propel our economy forward and create jobs by inventing new products and services.
But, while innovating and dreaming, many of the most important details of a business can get lost.
Understandably, while companies are getting off of the ground, owners try to minimize expenses until they start to become profitable. But cutting corners in certain areas -- such as insurance -- can become an extremely costly mistake.
In particular, most small and medium sized business owners are either unfamiliar with, or put off the purchase of, Legal Expense Insurance. Such products have been wildly popular in Europe for decades but have only recently become available in Canada.
Though the benefits could mean the difference between success and bankruptcy, few are aware of the many compelling reasons for such a policy.
Here are the top five reasons to look into legal expense coverage:
1. You might need to fire an employee. There are countless stories of employees being fired and then suing for wrongful dismissal. A Legal Expense Insurance policy will mean access to a qualified lawyer to work with you through the process to ensure all legal steps are followed, and in the event that a lawsuit should nonetheless be launched, your legal defense fees will be covered.
2. You might get audited. For new business owners, the process of filing your business taxes might be more complex than anticipated, which could lead to errors in paperwork that may trigger an audit. A legal expense insurance policy for small business would cover the expense of legal counsel should you be subjected to a tax audit.
3. Your business license could be in jeopardy. For example, as the owner of a bar or restaurant, you could get cited for serving an underage consumer resulting in suspension of your liquor license. Legal Expense Insurance means you're protected and will be represented in challenging the suspension.
4. You might inadvertently break the law. The media recently had a frenzy over the case of a Toronto restaurant owner charged with assault after allegedly throwing spices in the face of a would-be burglar. The case brings to life the confusion over the rights and responsibilities governing property owners' ability to protect their business.
A legal expense insurance policy would enable business owners to have access to legal advice should questions arise, and would provide legal support should you get into a legal jam while protecting your business.
5. A client refuses to pay. You might work countless hours for a client only to have them not pay the bill. A legal expense insurance policy will provide coverage to sue for the amount owed, and you keep 100 per cent of all funds collected.
Bonus Tip! Advice, advice, advice
Many of the above-mentioned situations could be minimized, diffused, or avoided altogether if small business owners had access to legal advice before situations arose. But with the average cost of a lawyer in Canada over $360 per hour, few have the luxury of being able to simply pick up the phone and ask a question.
One of the most compelling features of legal expense insurance, therefore, is that many offer legal advice to policy-holders as needed. Those needing legal advice can call at any time and be put into contact with a qualified lawyer to advise them on issues and respond to questions.
Simply having access to such valuable support can make an enormous financial difference to a small or mid-sized business.
We've all heard stories of vendors, competitors and industry icons that have run into legal troubles and we all want to believe that they will never happen to us. We hope they won't, but the smart money is on hedging your bets and protecting yourself with a legal insurance plan.