If you have that entrepreneurial spirit, and are looking to start a professional service (consultancy) business, a professional liability policy might be in order.
By nature, business owners are generally optimistic folks, says Inc. magazine. Consequently, you may not be the type to be thinking about all the worse-case scenarios that could potentially turn your adventure into a gloomy—and expensive—experience.
As such, the policy provides the kind of insurance for small business that is designed to the assets of business owners. For example, an Errors and omissions (E&O) policy is a type of liability insurance that may end up protecting you from financial losses your client may have experienced in his dealings with your firm.
Often, E&O policy owners are usually covered for court costs, plus any settlements up, to the ceiling amount specified in the policy.
“A professional liability insurance that protects companies and individuals against claims made by clients for inadequate work or negligent actions.”
Businesses today can be exposed to an array of claims that include, but not limited to:
* breaches of client confidentiality
* loss of documents or data
* libel, slander or defamation
* any infringement, unintentionally, of intellectual property rights
For example, if you finished a project for client that was on-time and on-budget, then who might think any fault could be found. With a professional liability policy you have coverage for a defense in case a client files a claim—regardless of how baseless it might be.
Those in the financial industry could at some point face a law suit if an investment doesn’t pan out; this, even though all the risks were spelled out for the client going in. Legal fees, either from lawyers or arbitration panels, can be hefty—an E&O policy can help mitigate these costs.