Running a business comes with a certain level of risk, whether you like it or not. You may have already heard about general liability insurance, which is meant to protect you against bodily injury or property damage claims. But what about errors and omissions insurance? Do you really need it?
What Is This Type of Insurance?
First things first, what is errors and omissions insurance? Also known as professional liability insurance, it provides protection for you and your business in case a customer sues you for mistakes or negligence in your professional services. This specialist insurance generally covers costs associated with legal defence and damages, but it varies depending on the policy.
Who Needs It?
One important thing to note is that errors and omissions insurance is not just for those in the medical or legal professions. Any business that dishes out professional services or advice can benefit from this type of coverage. For example, if you're a marketing consultant and create a campaign that falls flat, your client may try to sue you for lost revenue. So, this type of insurance can help protect you from such claims.
Do You Actually Need It?
This depends on a few factors, such as the type of services you offer and the potential risks involved. If your business involves a lot of client interaction and deals with sensitive information, this insurance may be worth the investment. On the other hand, if you're a freelance writer or graphic designer who rarely interacts with clients face-to-face, you may not need it as much.
Could It Be a Contractual Requirement?
It's also worth considering any contractual requirements. Some clients may require you to have this insurance before they'll work with you. Additionally, some industries may have regulatory requirements for this type of coverage. For example, in real estate, it's common for agents to carry errors and omissions insurance.
What Is It Likely to Cost?
The price will usually depend on factors such as industry, the size of your business, and the policy limits. But while it may seem like a significant expense, it could save you much money and headache down the line if a lawsuit arises.
What to Take Away
In summary, errors and omissions insurance can be an important investment for many businesses. Whether or not you need it depends on various factors, but it's worth considering if your business involves a lot of client interaction or sensitive information. Ultimately, the cost of insurance versus the potential cost of a lawsuit makes it a worthwhile consideration for any business owner.
For more info about business insurance, contact a local company.Share