Starting A Home Business? Invest In E&O Insurance
The Internet has made it possible for people to work from home. If you are starting a small business that you will operate out of your home, there are a lot of things to consider. Many small business owners make the mistake of thinking they don't need a comprehensive insurance policy because they will just be selling a few items online or providing services to a few clients.
This type of thinking could be costly. You should talk to your commercial insurance agent about securing errors and omissions (E&O) coverage for your home business.
What is E&O Coverage?
E&O insurance coverage is a type of professional liability insurance. Business owners will typically be advised to have a general liability policy in place to protect them against any lawsuits that stem as a result of physical damage caused by a product or service.
It's important to keep in mind that not just physical damages may occur when things go sour. Clients could experience financial harm as well. A client who feels that your products or services have compromised their financial standing could sue your home business in a court of law.
E&O insurance covers any legal fees and settlement costs that may arise from these types of lawsuits.
Who Needs E&O Coverage?
A comprehensive E&O insurance policy can be beneficial for home business owners in many different industries. The key is to ask yourself if you will be offering advice to your clients or acting on their behalf.
Tax preparers, attorneys, and other professionals operating out of their homes most definitely need E&O coverage, but they aren't the only ones. Wedding planners who handle the booking of venues and advise their clients on wedding choices could be subject to a lawsuit.
E&O coverage will protect wedding planners, beauticians, graphic designers, and other creative professionals against the potential harm a lawsuit related to negligent work or damaging advice could cause as well.
How Much E&O Coverage is Needed?
Since E&O insurance coverage plays an important role in protecting the financial health of your new business, you want to ensure that you invest in enough coverage when having your insurance agent write up your policy.
Many factors will need to be considered when determining how much E&O coverage is adequate for your business. You should factor in the type of business that you do and the number of clients that you anticipate serving each year to come up with a reasonable estimate for E&O insurance coverage.
