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Old 12-24-2007, 5:05 AM
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mikehaas mikehaas is offline
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Originally Posted by Davidwhitewolf View Post
I'm sorry to hear about both of you gentlemen's legal troubles.

For those who might be reading this thread and fretting about how to protect themselves in case their own businesses are ever sued, I would like to strongly suggest purchasing insurance -- and NOT just general liability insurance, which is what most businesses get. If your business is incorporated you may think that you are "insulated" from personal liability for the corporation's actions -- perhaps so, but you still have to go into court to defend yourself and prove it, and that costs big bucks. And here's the big surprise -- YOUR GENERAL LIABILITY POLICY WILL NOT PAY FOR THAT DEFENSE.

What you need is Directors' and Officers' Liability Insurance ("D&O" for short). It is a separate animal from other types of insurance. I'm an attorney with several corporate clients and am also in-house counsel for a couple of nonprofit corporations. I've seen first-hand what happens to corporate officers & directors who are sued when the company has D&O, and when it does not. The difference is like a dream vs. a nightmare.

If you haven't been sued before, and your corporation hasn't either, D&O can be relatively cheap. Shop around.
Excellent advice. And if you're a sole proprietorship (as most businesses are), note that your homeowner's insurance will NOT cover you.

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