Don’t Make an Error by Leaving Your Business Uncovered


For any small business to go without errors and omissions (E&O) coverage, they run the risk of potentially dealing with a major financial issue should their company be sued.

That being said, is your small business properly covered should it have to deal with a lawsuit from an unhappy customer or other individual or entity?

Whether you are an insurance expert or not, your small business needs to make sure it is protected, especially in today’s litigious society.

Small businesses are best protected when they have the following:

  • Property insurance – This covers you in the event there is a fire or break-in for example at your company;
  • General liability – This covers you in the event you are responsible for damage to another individual’s property;
  • Errors and omissions – This protects you in the event there is a civil lawsuit settlement coming out a bad business practice;
  • Workers’ compensation – This is required in most states to protect your workers should they be injured on the job and you if they turn around and sue you.

Importance of Errors and Omissions Protection

When it comes to errors and omissions coverage, this is vital for a small business to possess, given the variety of ways by which a company can end up on the wrong end of a lawsuit.

Among the different scenarios in which a company can be sued, whereby E&O insurance would come into play are:

  • You damage or destroy a customer’s possession while working for them;
  • Shipping or transporting an important customer order to the wrong locale;
  • Providing a customer with equipment that ends up damaging or ruining their property.

Does My Small Business Need E&O Coverage?

In the event you’re not sure if your small business needs this type of coverage, keep in mind that you need to be able to determine if you could financially survive a financial lawsuit. If the answer is no, then E&O coverage is paramount to your company’s financial success.

In deciding if your company can get by without such coverage, take a look at your current finances, how many employees you insure, and what type of business you run. If your business is one that has potential for lawsuits with customers and/or other companies, then by all means this is valued coverage.

While owning E&O insurance does not prohibit someone from suing your small business, it does add another thick layer of protection in the event that occurs.

How Much Will E&O Coverage Cost my Business?

When it comes to the cost of E&O coverage, a number of factors will dictate what your company will pay in premiums.

Among the areas to look at are:

  • Type of professionals services offered;
  • Location where services will be provided;
  • Your company’s yearly revenues;
  • Your company’s loss and claims history.

As you search for the right E&O policy, be sure to get a number of quotes, check the history of the insurance providers and their financial stability, and determine what plan is best for your company’s long-term needs.

With the right E&O policy, your company can find itself in a better financial position should the unthinkable happen.

Photo credit: thenaitp.org


Dave Thomas writes about a variety of small business topics providing helpful hints and tips to help grow a business. Dave’s background is in business insurance and telecommunications and has a passion for social media and sports.


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2 Responses to Don’t Make an Error by Leaving Your Business Uncovered

  1. Interesting post – to be honest, as a professional I think some kind of professional indemnity or liability cover is essential… it’s not worth risking your livelihood over is it?!

  2. Majority of small business owners do not care much about insuring their business. And when they run into trouble, they do not have a place to run to for help.

    John Benjamin
    http://www.123internetbiz.com

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