Top 5 questions from small businesses regarding errors and omissions insurance

Large number five sculpture Here are the Top 5 questions from small businesses regarding errors and omissions insurance:

#1 – What is errors and omissions insurance?

Whether you work out of a home office, or have many employees, errors and omissions insurance is the most important type of insurance a small business owner should purchase.  Also referred to as professional liability insurance, it protects your business from being sued as a result of your inability to provide services, whether or not you have actually done this.

#2 – Why purchase errors and omissions insurance?

Any small business that meets the following criteria, should consider purchasing errors and omissions insurance:

Ø  Does your small business provide a professional service?

Ø  Do your offer advice to clients on a regular basis?

Ø  Has a client requested that you have errors and omissions insurance to meet their needs?

#3 – What does errors and omissions insurance cover?

Errors and omissions insurance policies vary.  However, many of them cover not only your business, but you as an individual.  It is important to discuss with your insurance agent what specifically is covered in your policy.

#4 – What should the policy offer me?

It is important to make sure there are a few details included in your errors and omissions insurance policy, including:

Ø  Legal defense costs – It is important that you choose a errors and omissions policy that does include the cost of a lawyer, judgments against you and court costs.

Ø  W2 and subcontracted employees – In the event you use temporary employees, or subcontract your work out, it is important that your policy covers these types of situations.  In addition, it is important that you ask your sub-contractors if they have errors and omissions insurance, as yours may not cover them, or if they are sued separately from or alongside you.

Ø  Copyright infringement and intellectual property infringement –Even if you think you are taking the proper steps to avoid both copyright infringement and/or intellectual property infringement, it is important that you make sure your errors and omissions insurance policy covers you in case these situations arise.

Ø  Personal injury – Not everyone is going to like you and/or your company.  Having personal injury coverage under your errors and omissions policy can help protect, not only your company, but you from slander, invasion of privacy and libel.

Ø  Coverage worldwide – If any of your work is completed outside the U.S., you should make sure your policy covers this.

#5 – What else should I consider regarding errors and omissions insurance?

Aside from ensuring your policy covers the types of situations you may come across, here are a few more ideas about what you should consider when choosing errors and omissions insurance:

Ø  Customized coverage – You may not be concerned about having subcontracted employees covered, particularly if you do not use them. However, you may need worldwide coverage.  It is a good idea to look for coverage that is customized to meet the needs of your small business.

Ø  Flexible payments – An errors and omissions insurance policy may cost you a lot of money.  However, it may benefit you to find a company that offers a payment plan that suits your company.

While not all of your questions regarding errors and omissions insurance may have been answered, this will give you a head-start on ensuring you have what your small business needs.

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