The Importance of Liability Waivers for Small Businesses - APOLLO Insurance (2024)

If your business contains any kind of risk for employees or customers, it’s essential to ensure you have a waiver or release form in place.

Certain businesses have inherent risks. No matter how much you plan for and try to avoid these, oftentimes they can be unavoidable. For instance, if you own a waterpark, there are plenty of scenarios where someone could get hurt on one of your water slides or in a busy wave pool – at no fault of your own.

For this reason, it’s important to make sure your customers sign a waiver form that gives them assumption of risk and terms of service so that they can’t come after you for any personal injuries they may sustain.

In this article, we’ll be going through everything you need to know about release of liability forms and waivers.

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What is a liability waiver?

A liability waiver is a legally binding document that, if done correctly, can protect a business from a customer or employee coming after them for civil damages due to any inherent risks.

Liability waivers are also known by a number of other names, such as a general waiver, online liability waiver, waiver of liability agreement, liability waiver form, hold harmless form, or legal release.

Having your participants or employees sign a release form can save you and your company from dealing with potentially harmful negligence suits and legal action.

Typically, waivers of liability are a legal document made up of six different parts, in the following order:

1. Inherent risks: The first thing your general liability waiver should contain is a description of the inherent risks involved in your event or activity. This is an important step, as any risks missed in this section (or not clearly laid out) could result in a lawsuit.

2. Acknowledgment and assumption of risk: Now that you’ve laid out the potential risks in straightforward and simple language, this part of the clause ensures that the participant understands them and what they involve.

3. Release clause: This clause ensures that the participant understands exactly what rights they’re giving up, so it’s important to be clear here as well. Getting legal advice is a good idea for the release clause, since this section will be extremely important should it ever be scrutinized by a judge if you were to end up in court.

4. Indemnification clause: Liability waivers don’t just protect you in case of injury of a customer or employee, but they also cover any damage they may cause. Indemnification clauses are important in deterring lawsuits caused by third party members as a result of something done by the signer.

5. Insurance claims: This part of the waiver discusses the terms of your insurance policy, and how it will not cover any participant damages.

6. Forum selection and choice of law: Since different geographical regions can have different laws on the same subjects, this part of the waiver clears that up by claiming any relevant regional laws that apply.

Do I need a liability waiver?

Liability waivers are important not just for high-octane businesses like sky diving and safari tour companies, but also for any major customer-facing businesses. Even many spas, salons, fitness centers, and gyms have liability waivers to take the extra step in protecting themselves and their ventures.

Do liability waivers protect me from lawsuits?

It’s important to note that liability waivers will not protect you indefinitely from lawsuits in every scenario. There are a number of situations where you could be held liable despite having had your participants sign a waiver, including but not limited to:

• Unclear language: If the language in your waiver is unclear or doesn’t lay out all of the potential risks, an injured party could take you to court. If the presiding judge deems your language to be too hard to understand for the average reader, they could side with the opposing party. While it may cost a small fee, it’s well worth it to consult a lawyer or law firm to find out if your liability waiver covers everything that it should.

• Negligence: This includes any cases of “gross negligence” in which a company is found to not have used reasonable care. For example, if a rock climbing company is enforcing waivers but they don’t put out a wet floor sign after mopping and a customer hurts themselves, the customer could still go after the company, even though they signed the waiver.

Do I need insurance if I’m using a liability waiver?

All companies should have insurance, but especially small businesses. While having a waiver in place is a good step in reducing the potential harm that could undercut your company, there are plenty of scenarios in which an uninsured business is still at risk.

A good business insurance policy will generally include four types of basic coverage:

• Commercial Property Insurance: This policy is intended to protect the physical aspects of your business. Fires, earthquakes, floods, and even vandalism can cause damage that’s expensive to repair. Commercial property insurance can help mitigate those expenses.

• Business Interruption Insurance: This important aspect of business insurance helps cover the costs of running your company in the event of an interruption. For instance, if you end up having to send your employees home because of a temporary closure, this policy can help take care of their salaries so it’s not coming out of your pocket.

• Crime Insurance: Also called fidelity insurance, this policy helps protect your bottom line in the event of money, stocks, or property being stolen, whether it be from an employee or a third party.

• General Liability Insurance: Perhaps the most essential part of any business insurance plan, general liability protects you from claims brought against your company that involve bodily, property, or financial harm.

Related: Small business checklist

If you’re looking for more information on small business insurance, contact APOLLO today! Find coverage that is best suited for your business and receive your policy directly to your inbox immediately after purchase.

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