Do You Need Errors and Omissions Insurance?
Rahul is a social media marketing consultant. One of the business owners approached him for his services. They want to grow their social media following and drive higher sales. Rahul advised them on the kind of campaign they should run and the content they should produce. The business owner did exactly that. Turns out, the campaign backfired and the business owner sustained damage to their brand image, which translated into financial losses. Miffed, they decided to sue Rahul for his poor advice.
Now, if Rahul had errors and omissions (E&O) insurance, it would have covered his legal costs of defending himself (like hiring a lawyer). The insurance would also have covered the amount that Rahul would pay, if any, as a settlement to the business owner. But since he doesn’t have the insurance, he would have to spend from his pocket, which could be quite an expensive affair.
This is a very basic example, but it happens often. Services providers do get sued for varied reasons. Some of the common claims are negligence, breach of contract, misrepresentation, inaccurate advice, and violation of contract terms.
If you’re exploring different types of business insurance to protect yourself and your company against legal liabilities, errors and omissions insurance could very well be a must-have. If you’re not sure, here are three signs that you do require E&O insurance:
1. You provide professional services
Indeed, this is a rather generic “sign”, but it does say a lot about the importance of errors and omissions insurance. Almost every services provider should have this policy.
Lawyers, doctors, financial adviser, digital marketing consultant, real estate agent, web developer, programmer, wedding planner, stock broker, accountant, travel agent, architect, property manager, interior designer, and more – they all should ideally have E&O insurance.
If you’re one of these services providers – if you provide any kind of professional service to clients/customers – you’re exposed to legal claims. To protect yourself and your financial well-being, you should buy the said policy. (Of course, what kind of coverage you should get or how much it would cost is a whole different conversation altogether. Talk to a licensed insurance broker regarding that.)
2. Your competitors have been sued
This is a very evident sign. If one or more of your competitors – who offer services just like you – have been sued by their clients/customers on grounds of negligence, omissions, inaccurate advice, and other similar reasons, you could very well be one of them.
You’re vulnerable. Your clients/customers can sue you as well. So, you have no reason to not buy omissions and errors insurance policy.
3. It can boost your business
Imagine you’re looking for a professional consultant for advice on your business
Would you rather go with someone who is insured and can conveniently pay you in the settlement if you decide to sue them for bad advice OR someone who is not insured and getting the settlement amount from them could be a challenge?
Yes, that’s a long question. And yes, if you’re a rational consumer, you would go with someone who is insured.
If you having errors and omissions insurance can add credibility to your profile or brand – and can get you more clients/customers because of that – you should definitely get insured. From plumbers to attorneys, they use them being insured to promote or sell their services. You can follow suit!
Ready to Buy Errors and Omissions Insurance?
Now that you know you should, in fact, buy E&O insurance, don’t rush to buy it. Learn more about it first; its ins and outs; the caveats the policy comes with. For instance, there is a range of things this policy doesn’t cover; like fee disputes, punitive damages, bodily injury and more. Having a clear picture of the policy will help you pick the right plan that provides sufficient coverage. So, get in touch with licensed insurance brokers and consult them. Have them assist you to find the right errors and omissions insurance policy from a top insurer that fits your exact needs and budget.