You’re a small-business owner. You do quality work and offer top-notch services, leaving customers satisfied and singing your praises. You’re well-liked by all and no one could ever take issue with your business, right?
Well, you can hope for the best, but you should certainly prepare for the worst. Dissatisfied clients or customers can sue small businesses and startups, even is the alleged transgression is little more than a figment of the imagination. Still, any lawsuit can create an immense financial burden, so it’s wise to invest in Professional Liability Insurance (also known as Errors & Omissions Insurance) to address your risk.
If you need a little more convincing, here are four ways a Professional Liability Insurance policy benefits your business:
- Frivolous lawsuits won't leave you strapped. Sometimes, you can do everything right, and an unhappy customer will still find an issue with your work. Even an unfounded lawsuit can cost you between $2,000 and $5,000 in lawyers’ fees. Take, for example, the real-life case involving a plaintiff who used directions from Google. A car struck her while she walked along a rural highway with no sidewalks, so she sued for damages, alleging that Google negligently sent her into danger. However, the plaintiff couldn't prove Google owed her a duty of care. Google got the case dismissed, but still had to pay for attorney fees and court costs. That's not even a drop in the bucket for a billion-dollar company, but you’re a small business – do you have thousands of dollars at your disposal for a frivolous lawsuit?
- You don't have to worry about serious lawsuits. Just as you can face a meritless claim, you can easily get sued for real problems with your services. If a client has a legitimate claim, you’ll owe much more than lawyer fees and court costs. If the court rules in favor of the plaintiff, you could owe hundreds of thousands of dollars in damages to your client. With an Errors and Omissions Insurance policy, you won’t have to bankrupt your small business to pay for an expensive lawsuit.
- It proves you’re a professional. And that’s attractive to customers. Professional Liability protection shows clients you have coverage to back up the quality of your work. Before signing big contracts, clients may even ask for proof of your coverage. Already having a policy in place sets you apart from your competition and strengthens your business's credibility.
- It saves your business money. Negligence lawsuits are pricey, and a Professional Liability policy makes sure you don't have to pay all those expenses out of pocket when faced with one. With the appropriate risk management strategies in place, you may save money on your premium, too. Training your employees, using clear and concise contracts, and documenting all correspondence with clients can minimize the chance of a lawsuit. Fewer claims on your policy can keep your E&O rates low.
To learn more, read our blog series on Professional Liability Insurance or talk to an insureon agent today.