Running a Web-based business has its own headaches without having to worry about what would happen if someone files a lawsuit.
It remains, however, that lawsuits happen quite frequently and they can wipe out years of hard work in the developing and nurturing of your company.
According to a Small Business Administration report, 36-53 percent of small businesses are involved in at least one litigation and a Fulbright study found that 90 percent of all businesses are engaged in litigation and at any given time. The point here is that any business at any time can be engulfed in a lawsuit that eats away valuable time and erodes company profits. While there are ways to protect professionals and their businesses (more on that in a bit), anyone operating on the Web should understand the five prominent ways they could find themselves in legal trouble.
1. Being sued for harm caused to website user
Though it sounds a little far-fetched at first, Web-based businesses can be sued for what their website does or does not contain and who it is not accessible to. As recently as this week it was reported eight colleges were being sued for violation of the Americans with Disabilities Act for alleged failure to make their websites accessible to disabled students. It is a site owner's responsibility to ensure they meet requirements and hire professionals who understand those requirements and can meet them successfully.
2. A project could go wrong
Providing a product or service to your clients on time and on budget isn't always easy. Some clients understand reasonable delays, but others sue for all kinds of damages, both real and unrealistic.
3. Harm to a client either physical, emotional, physiological and more
If a website delivers a product to a customer, there is always the potential they could be harmed in some way by the product or in its delivery, and even with a service there are risks (e.g., consulting, developing or training).
4. Hacking, breaching and stealing content-this is a big one!
We've all seen the fallout from Yahoo, Target, Equifax and many others. The stealing of customers' contacts is dreadful enough, but the blemish on the reputation of these companies could take years to erase.
5. And then there is the litigation arising from the Computer Fraud and Abuse Act (CFAA) and its rules on data security and privacy
Under this Act, litigation is typically focused on:
- Copyright Infringement
- Product Disparagement
- Tortious Interference
- The Right of Publicity
All of these, and more, can creep into your business life and cause havoc. The good news is that obtaining the right protection will put your mind at ease and free you up to focus on important business strategies.
What's the Solution?
To protect yourself and your business, consider starting with General Liability Insurance coverage, which protects your business assets from claims of injury relating to your business and responds to claims of negligence made by a third party.
Another important solution is Cyber Insurance that protects your business in the event of a data breach caused by hackers or a slip-up by an employee. Cyber security insurance protects and covers businesses against these hacks, covering data loss, business interruption, computer fraud, loss of transferred funds and cyber extortion.
These are just the basic insurance needs for your Web-based business. It is best to consider and research other forms of insurance to fully protect your business.
About the Author Charong Chow is Head of Content at
Embroker, which empowers businesses to take the risks that will help them grow. Embroker provides technology that takes the pain out of insurance, offers expert service from the best brokers in the game, and partners with the nation's leading carriers to surface policies tailored to your company.