If your business provides clients with professional advice or services of any kind, you may want to think about purchasing an errors and omissions insurance (E&O) policy. Commonly referred to as professional liability insurance, this policy protects your business in circumstances of court filings and litigation processes.
Think of it this way: if a dissatisfied client sues your company for providing what they deemed to be “poor service or advice,” could your company handle the financial strain of paying for the cost of lawyers’ fees? And if you lost the case, could you pay restitution? At CoverHound, we want to help your small business succeed. That’s why we recommend E&O insurance.
Who Does E&O Insurance Protect?
Although E&O insurance is not mandated by law in all states, it’s an essential policy to have as a small business owner. Medical professionals and attorneys are required to carry a policy, with medical and legal malpractice policies serving as a very specific type of E&O insurance. According to the Insurance Information Institute (III), here are 10 other professionals that should get professional liability insurance:
− Architects
− Engineers
− Accountants
− Graphic Designers
− Investment Advisors
− Insurance Professionals
− Management Consultants
− Software Developers
− Information Technology (IT) Consultants
− Real Estate Agents and Brokers
As you have probably noticed, each of the above professionals work with the public and provide a specific service, be it in design, finance or medicine.
This is just a sampling of the public service professionals that need professional liability insurance. Regardless of whether or not you think your business needs E&O insurance, ask your insurance agent.
What Does E&O Insurance Coverage Provide?
The Insurance Journal writes that professional liability insurance protects you and your business when a customer holds you accountable for a faulty service they say you provided. E&O insurance covers the settlements, judgments and defense costs that ensue in a legal battle.
Even if your business practices are safe and you never fail to provide stellar service, one disgruntled client can cost you thousands of dollars to defend against in a lawsuit. A lawsuit can easily bankrupt a small business, burying everything you had invested.
No matter how good your business practices are, no one is perfect and mistakes will be made. According to the Business Practical Knowledge blog, it has been estimated that small businesses pay as much as $20 million out of their own coffers for liability losses annually. And for every business that makes $1 million per year, they spend on average $20,000 in lawsuits. Not just that, but 43 percent of small business owners said their business had been threatened with or involved in a lawsuit. This is terrible news, especially as small businesses account for 64 percent of all new jobs created in the U.S.
Don’t be another statistic. Protect your business with errors and omissions insurance. Find your policy with CoverHound today!
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