If you provided a service that did not have the promised results, a client can sue you for error and omission. This is where the E&O insurance cover comes in. For medical practitioners, it is referred to as malpractice insurance. It’s also called professional liability for such professions as accountants, engineers, lawyers and architects. The insurance covers you from any errors you have made or you have allegedly made. It is coverage against error and omission on your part that may result to financial loss on the part of the client. Even if it was an allegation, the amount of money needed to defend the lawsuit could render a small business bankrupt. Most small business owners are ignorant of this cover. It is very vital to be in the know of how to develop an insurance portfolio that in mitigating the risks of this litigation.
Most small business owners tend to think that there is wholesome insurance product for all small businesses. Nothing can be further from the truth. Constructing an insurance portfolio will call upon a small business owner to buy several different insurance products. Some of the insurance products that apply to a small business include the following:
* Property insurance: Pays you for any fire damage to your premises.
* General liability: Pays for any damage you may cause to another person’s property.
* Errors and omission insurance: Pays for lawsuit settlement due to error on your part.
* Workers compensation insurance: In case workers sue you, this pays for your legal fees.
Who exactly need E&O insurance? If your company deals with providing a service to clients for a fee, then you have an error and omission exposure. If your service is not done well or on time and ends up costing your client money or even harms the clients reputation, then you may end up being sued for E&O.
Simply put, no one is perfect. Even with the best strategies to mitigate errors coupled with the most competent employees, mistakes are still bound to happen. You can still make mistakes even with great risk management strategies. This makes the E&O insurance your best bet in case of any errors and omission, including the most unprepared for cases. Picture this; a freight forwarder, instead of sending a shipment to South America, sends it to South Africa making the client to lose a sale of hundreds of dollars. In such a case, who pays for the loss cause to the client? A part from the cash bit, it may risk a tainted reputation on the part of the client and even cause loss of subsequent contracts.
Make an E&O insurance apart of your insurance portfolio as early as possible. This affords you peace of mind in case of anything, knowing that compensation will be made.
