Five types of businesses that need errors & omissions insurance

Editor's note: This article is part of our monthly Business University series for SMEs and entrepreneurs. See more articles that may be useful to your business here.

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If you're running a service-based business, there is the real possibility of encountering dissatisfied clients. Unhappy clients could potentially cost you and your business big time. That's why errors and omissions (E&O) insurance is critical for any business selling its expertise. Also known as professional liability insurance, E&O insurance covers your company from claims of unsatisfactory service delivery.  

Here's a list of five types of businesses that should need E&O insurance.  

Real Estate Brokers

For any real estate brokerage company, oversights in property listings or errors on titles carry the risk of a lawsuit. Such cases could come down to genuine mistakes or litigious clients. An E&O policy provides coverage against client accusations of negligence, failing to deliver on a service, or professional inaccuracies, whether you're at fault or not. The policy also covers legal costs that might otherwise have a financial impact on your business. 

Accountants 

In accounting, errors in bookkeeping, issuing incorrect tax advice, failure to maintain appropriate documentation, or non-compliance with GAAS and GAAP all carry the potential risk of litigation. Engaging in lawsuits is typically an expensive affair and could permanently sink your business. E&O insurance covers legal expenses including settlements and attorney's fees alongside payment for damages. 

Insurance Agents

Whether you run an established insurance agency or work as an independent broker, issues such as miscommunication and inadequate or missing coverage all carry litigation risk. An E&O policy covers your business against claims of oversight, professional negligence, or unfulfilled promises. The policy ensures you don't have to cough up any amount from your business's coffers by covering any legal fees in case of a lawsuit. 

Engineers 

Engineering is highly meticulous and typically involves high-cost projects. As an engineer, you are often responsible for tasks such as securing building permits, inspection, understanding zoning, and ordering building materials. Even the most minute oversight could lead to missed deadlines, design flaws, construction defects, or client dissatisfaction. If a client sues your company, E&O insurance covers all legal expenses including court costs, attorney's fees, judgments, settlements, and fines. 

Consultants 

From helping create projects to giving clients advice, consultants have a wide scope of operation. Depending on your field and the type of services you offer, you potentially face a variety of situations that could end in litigation. The financial implications of a lawsuit could have far-reaching consequences. An E&O policy safeguards against claims of negligence, inaccurate advice, unintentional mistakes, or a violation of good faith.  

Conclusion

Earning a living by offering a service can be as rewarding as it is risky. All it takes is one dissatisfied client and your entire business could face significant financial implications in the form of lawsuits. Errors and omission insurance is critical in covering against issues such as incomplete work, wrongful advice, missed deadlines, breach of contract, budget overruns, or negligence. For a service-providing business an E&O policy isn't a luxury, but a necessity. For the sake of your business's financial safety and your peace of mind, get E&O cover today.