POST WRITTEN BY
Ali Jamal
Ali Jamal is the Owner and CEO of Stablegold Hospitality, a real estate investment company.
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When it comes to premises liability claims, in general, the onus is on a business or property owner to ensure reasonable care of the premises. When proven negligent, they can become a target for personal injury attorneys whose aims are supported by statistics.
In 2017, more than 53,000 personal injury cases were filed. Just a few years earlier in 2014, that number exceeded 76,000. Although there's been a decline of personal injury case filings in recent years, I believe it is still as important as ever to ensure you know how to prepare for potential liability at your business.
Justia, a website offering free legal information, explains that some people decide to sue the property owners (instead of the actual perpetrators) because the owners tend to be easier to locate and have likely purchased some form of insurance that would cover the person's damages.
Over the past nine years, while developing a real estate portfolio for Stablegold Hospitality that consists of seven C-class assets, I have learned it is essential for business and commercial property owners to have a three-pronged approach to these claims: specialized legal counsel, unambiguous insurance coverage and on-site third-party security.
Try to hire attorneys familiar with your asset’s class.
Excellent defense lawyers exist within this pool of professional practitioners. Acquiring them, however, can be like finding a needle in a haystack. What makes the quest even more laborious is they must be specialized in the right asset class.
Counsel that specializes in representing owners of A-class properties, such as high-end resorts, are not always exposed to the same tribulations of a C-class property owner based in a low-income district, for example.
I believe the best to approach to finding specialized counsel is through recommendations from qualified sources within one’s personal network. If you can find a lawyer who specializes in suing C-class asset owners, ask them which attorney gave them the biggest run for their money with a case they tried. This is exactly how I found my defense attorney for premises liability.
Ensure you have sufficient insurance coverage.
Another benefit to acquiring attorneys who have a niche, I believe, is that one can leverage their referral network and expertise in other areas, such as insurance coverage. Whether a patron sits on a broken piece of furniture, trips over a wire or is bitten by another patron’s dog, premises liability coverage is needed to pay for the injured party’s medical expenses.
Here again, shopping for insurance that adequately covers the correct asset class is paramount. Premises liability insurance for assets in areas where crime rates are higher and buildings are older, for example, must be unambiguous. General liability policies might have exclusions that need to be investigated and supplemented. From my perspective, the insurance company should be well-known and have a fair reputation for payout, and its brokers must properly assess the environment to ensure the coverage is adequate.
A good environmental assessment considers general risk factors, but I believe a superior assessment also targets the right asset class. In the same article, Justia explains that in court, property owners who have assets in areas with relatively higher crime rates must prove their due diligence in preventing these crimes on their properties. They’re expected to regard these events as foreseeable, given the socioeconomic climate in which their businesses are operating.
Consider hiring on-site security.
One standard that commercial property owners of all asset classes should have in common relates to on-site security. The number of security guards and frequency of their shifts can vary among asset classes, but the employment category and reputation should not.
From my perspective, all commercial property owners should invest in a dependable, trustworthy security presence that is outsourced by a well-known third-party. I believe that recruiting these individuals to join the company’s staff as contractors is not advisable for a number of reasons.
First, security companies usually carry their own general liability insurance. They become a business owner’s first line of defense when they are sued for incidents involving one of the security guards. The risk of such an altercation is not very high because their guards are thoroughly vetted, trained and certified. In my experience, I have seen that many security companies are even started by ex-police officers who have good relationships with local law enforcement.
Second, I believe that having a good security company provides better optics for the premises. A professional security guard in uniform shows customers that the property owner cares about the safety of guests and is willing to invest in that safety.
Lastly, having a third-party company enables business owners to focus on the business instead of securing the premises. From my perspective, if the property owner's personal staff is contracted as security guards, the amount of time that could be sucked away by security incidents is unavoidable, as all these incidents represent potential liabilities.
Having a reputable security presence, I believe, is an excellent first line of defense for a business owner who is threatened by the likelihood of premises liability claims. In some cases, it could be the strongest prong in this three-pronged approach. If property owners are struggling with balancing the dollars and cents for this investment, they should remember that having the right security presence has the potential to reduce their dependency on the other two prongs — adequate premises liability coverage and strong counsel.
Building and maintaining a successful business on any premises requires an army. The three prongs we’ve discussed are its battalions. Requirements for each battalion’s size, reputation and experience depend on the property or business owner's needs. Asset classes in which those businesses operate go a long way in helping to define those requirements, and recruiting the right army will go a long way in helping prepare and protect owners from premises liability claims.
