Limiting risk exposure for dangerous business activities

Nina L. Kaufman, Esq.

Nina L. Kaufman, Esq.

An award-winning small business attorney in New York City, Nina is a sought-after professional speaker and Entrepreneur Magazine online contributor. She is the go-to counsel for knowledge economy and creative companies, delivering legal services and educational resources that save them time, money, and aggravation.

Posted on June 14, 2015 in Business Essentials

Q.:  My friend and I are trying to start a construction cleanup business. We’re wondering: Do we have to get small business insurance if we are the only ones working? Are there any other legal factors we should consider?

A.:  Yes, yes, a thousand times YES!  Any business that deals in high-risk and related activities, like construction, should be sure to have appropriate levels of small business insurance in place to limit risk exposure.  Otherwise, you run a serious risk of bankruptcy (if there’s a judgment against your company) or worse, risk exposure of the owners personally.

In addition, small business liability insurance may well be a requirement of any job that you work on.  Be sure to speak to a commercial insurance professional to make sure you have the levels—and different kinds of small business insurance—that you will need to limit your risk exposure.

There are other legal steps you’ll want to consider to reduce your risk exposure.  These include:

  • Forming a separate business entity
  • Having a written contract for all of your jobs
  • Complying with any health or safety regulations that are relevant to your small business
  • Don’t overlook codes and regs concerning sanitation and disposing of hazardous materials.

Finally, as to the small business itself, you’ll want a clear understanding with your business partner about decision-making, capital contributions, and why each of you might leave the business—which you’d address in a partnership agreement. A local attorney who understands the construction industry should be able to help you with these items and help you keep risk exposure to a relative minimum.

Here are more law questions about small business insurance.



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