The profit margin for many small businesses is very thin. Unfortunately, this situation leaves entrepreneurs vulnerable in the event of unforeseen events. Getting sued, whether the incident was your fault or not, could potentially send the company you have worked so hard to build over the abyss into bankruptcy, and that is why yours might be one of the business types that would benefit from errors and omissions insurance.
What is Errors and Omissions Insurance?
Otherwise known as professional liability coverage, errors and omissions insurance packages shield you from the financial consequences of negligence claims brought against you by your clients as well as the cost of damages that you may be required to pay if you lose the case. This coverage protects you if you are accused of failing to perform according to customer expectations, if you are alleged to have caused financial loss to your customer or if there was an error or omission having to do with a product or products you sold.
Because more general liability policies do not address these issues, owners of specific types of businesses would do well to add this extra layer of protection. Here are just a few:
1. Medical Providers
Better known as malpractice insurance in the medical industry, errors and omissions insurance protects physicians and other medical professionals in the event that they are accused of misdiagnosing, mis-prescribing or making mistakes in the treatment of patients. Because lawsuits can run into the millions against medical professionals, this coverage is crucial.
If you are a veterinarian, it is just as necessary that you protect yourself. Pet owners who believe that your actions or the lack thereof have led to injury or death to their animal are also quite likely to take you to court.
2. Legal Service Providers
Believe it or not, lawyers can get sued, too. If you are offering advice about the law to your clients, you need to protect yourself in the event that your words of wisdom did not yield the results your client desired.
3. Accountants and Other Financial Consultants
If you are preparing taxes, doing freelance bookkeeping or helping clients prepare for retirement, you play a key role in their current and future prosperity. In spite of your best efforts and careful research, however, you cannot possibly predict the ups and downs of the stock market. There may even be times when you are not familiar with an obscure IRS tax rule that comes back to bite one of your customers. Paying a premium to protect yourself against lawsuits that could stem from these mistakes needs to be at the top of your priority list.
4. Designers
Companies entrust web and graphic designers with a very important task: to come up with advertising and websites that will attract new customers and encourage existing ones to continue to buy. If your business involves doing creative design of any kind and your client does not get the sales she had hoped for, her next logical step is to blame you – potentially in front of a judge. Business liability insurance can protect you against the potential financial consequences of her displeasure.
Errors and omissions insurance is available through most insurance providers and can often be added to your existing business coverage. If you are in the business of giving advice to or manufacturing products for clients, there is a good chance that you could benefit from this type of protection. Talk to your agent today.