Keeping your business’s doors open depends on a number of factors. But it’s clear that maintaining your business’s property and equipment is a huge part of that. If these assets are damaged in a fire or natural disaster, it might be difficult for your business to recover. So, you need to protect them. The best way to protect your business and be able to recover some of the costs associated with repairing or replacing your property, is to carry enough hazard insurance. Otherwise known as commercial property insurance.
What Does Hazard Insurance Cover?
Hazard insurance covers both the building that your business owns or rents, as well as the equipment that it uses. Depending on your policy, hazard insurance will generally cover the cost to repair or replace the following items:
Personal property
Tools and equipment
Inventory
Furniture
Computers
Accounts receivable
Documents
Outdoor landscaping
It will cover damages to the above due to:
Fire and smoke damage
Theft and vandalism
Some weather-related events such as hail, lightning, snow, sleet, or ice
Explosions
Aircraft or vehicles
Sprinkler leakage
Building collapse
Water (in certain specific cases)
Civil unrest or rioting
Damages caused by floods, earthquakes, acts of terrorism, nuclear attacks, or damage resulting from war are typically not covered by hazard insurance policies. You will need a separate insurance policy to protect your business from these occurrences.
Does My Business Need Hazard Insurance?
Even though business owners in many states are not required to have hazard insurance. It is still a good idea to get it because it can assist in covering the costs of damages that you would otherwise have to pay for out of your own pocket.
And while you might not be required by your state to have hazard insurance, in many cases if you want to borrow money for your business from a financial institution, you will most likely be required to have a particular type of hazard insurance policy. For instance, loans from the Small Business Administration (SBA) may require evidence of business hazard coverage.
If you’re looking to take out a loan for your business, you can read more about this topic here.
Do I Need Hazard Insurance if I Have a Home Business?
If you run your business out of your home, your homeowner’s insurance policy might not be sufficient to cover the business-related property that you keep in your home. This means you’ll probably want to have a separate policy.
The Cost
The price of hazard insurance will vary widely depending on a number of factors, including:
The age of your building/property – If the workspace that you own or rent is older, you’ll typically pay higher premiums because repairs to older properties tend to be more expensive.
The value of your building/property – The higher the total value of your assets, the higher the premium for this coverage will be.
Whether you choose a cash value or replacement cost policy – With a policy that pays out based on the actual cash value of your property, your payout will be determined by how much your property was originally purchased for before it was damaged. But if you have a policy that pays out based on replacement value, you will be covered for how much it would cost to buy a brand new version of the item that was damaged. Because of the effects of depreciation, cash value insurance is typically more affordable than replacement value insurance.
Coverage limits – As is the case with the vast majority of insurance policies, your monthly premiums will go up as you add more coverage.
Lender requirements – A lender may require that you have a certain amount of property insurance coverage before they will approve your application for a loan. The more insurance your lender requires, the larger your premium will be.
Hazard Insurance for a SBA Loan
The Small Business Administration (SBA) helps small businesses get the credit they need by putting the government’s name on loans made by commercial lenders. The lender provides the loan, and if the borrower doesn’t pay back the loan, the SBA will cover up to 85% of the loss.
To get a small business loan from the SBA, you need to show that you have hazard insurance. Having this type of policy shows that you own real assets that can be taken if you can’t pay back the loan. For example, if a construction company wants to borrow money to buy a piece of equipment but can’t pay back the loan, the lender can take ownership of the equipment.
Types of Hazard Insurance SBA Might Require
In order to be eligible for a loan from the SBA, you will have to show that your business has adequate insurance coverage. This could mean having general liability coverage as well as commercial property insurance/hazard insurance. Keep in mind that depending on the kind of loan you want to get, the Small Business Administration might require you to have other types of insurance coverage, such as workers’ compensation.
Specifically, the Small Business Administration requires the following when it comes to hazard insurance:
The minimum required coverage amount is 80% of loan principal.
Your business’s name must appear on the insurance policy.
Your DBA name must be included in the policy if you use one.
You must show proof of the required insurance within 12 months of receiving your loan. If your business does not already have it when you apply for your loan.
Is Hazard Insurance Tax Deductible?
The Internal Revenue Service considers business insurance premiums to be an ordinary and necessary business expense. So, yes it can be tax deductible. But there are other factors to think about when determining if your hazard insurance is tax deductible.
If you have a home-based business, you may be able to deduct some of your operating costs from your taxable income. Insurance premiums can fall into this category, along with utilities and home office essentials. For instance, you can deduct half of your annual hazard insurance premiums if your home is used for business purposes in excess of 50% of the time.
If your company suffers losses in an area where a federal disaster declaration has been issued, you may be eligible for deductions. If you have hazard insurance and your insurer only pays a portion of your claim, for instance. You can deduct the amount of your claim up to $500 per incident.
Other Types of Business Insurance You Need
What, where, and how you do business will determine the specific types of coverage your company needs. The following are some examples of common types of business insurance policies, other than commercial property/hazard insurance:
Workers’ compensation, which is also referred to as “workers’ comp,” is a type of insurance policy that is mandated by law. It provides benefits to employees in the event that they sustain an injury while performing their job. Employees can receive financial compensation, medical benefits, or both from the fund. Which fills the role of an insurance policy for disabled workers. Different states have different regulations regarding workers’ compensation, so check out our state-by-state guides.
Standard liability claims made by third parties (people who are not affiliated with your company) are covered by general liability insurance. This type of commercial insurance policy will pay for your company’s legal defense expenses in the event that your company is sued for causing bodily injury, damage to property, or injury to reputation. This includes everything from hiring an attorney to paying for court-ordered judgements and settlements. As well as any other costs that may arise.
General liability and commercial property insurance are the two main components that make up a business owner’s policy, or BOP. Which is essentially a bundle of the two (or more) types of commercial insurance. With a BOP, you will be protected from financial loss and covered for any claims that would be covered by either of those two types of policies. One simple policy can protect your small business from a variety of significant legal risks.
Commercial Property Insurance
As covered above, this type of policy typically includes coverages for the most common hazards. It safeguards both the structure and the contents of your business’s property.
If your business uses vehicles, you’ll need commercial auto insurance to cover things like liability, accidents, medical bills, personal injury protection, and uninsured motorists. It’s similar to a personal auto insurance policy. But commercial auto insurance has different eligibility requirements, coverage, exclusions, and limits than personal auto insurance.
Working With EZ
Our insurance agents work with the leading insurance companies across the country to ensure that you have access to the best coverage options for your business and its employees. In fact, we can save you hundreds of dollars annually by tailoring our search to find you exactly what you need, at the best price possible. If you have any questions, please do not hesitate to contact us at 877-670-3538.
If you’re a small business owner, there are probably a lot of things that worry you. One of them might be the amount of liability insurance you should have. Since facing a major lawsuit could mean losing everything you’ve worked for. This, of course, is the worst-case scenario. Since the likelihood of being hit with a lawsuit that your current insurance policy won’t cover is fairly low. But, even so, it’s better safe than sorry – and this situation is entirely avoidable with an umbrella liability policy.
Umbrella insurance is a supplemental form of liability insurance that kicks in when you exhaust your primary policy’s liability limits. In the following, we’ll examine the specifics of this type of liability insurance. Including what it is, who needs it, how much it costs, and what it doesn’t cover.
How Does an Umbrella Liability Policy Work?
If you choose to purchase an umbrella liability policy for your business, you will actually be getting two different types of coverage: liability and defense. Even though you might already have a general and/or professional liability policy for your company. Umbrella policies provide additional coverage that extends beyond the boundaries of your primary insurance.
So, if your business faces a lawsuit and you are liable for damages that are greater than the limits of your commercial insurance policy, an umbrella policy will help you to pay the remaining amount. That means you won’t have to sell any of your assets. Or use any of your savings to pay the additional expenses out-of-pocket.
It’s important to note that since umbrella policies are supplemental coverage. You can’t purchase one of these policies without first having primary liability insurance.
What Does an Umbrella Liability Policy Cover?
Commercial umbrella liability policies work pretty much the same as traditional commercial liability policies. It also provides protection against the same types of risks. To be more specific, an umbrella insurance policy will give you supplemental coverage for the following:
Slip and fall injuries – If you have general liability insurance and also purchase commercial umbrella insurance. Your supplemental policy will cover any excess legal costs in the event that a third party sustains an injury on your company’s property.
Third party property damage – The addition of commercial umbrella insurance to a general liability policy will help to pay legal fees associated with the destruction or damage of third-party properties.
Car accidents – If you have a commercial auto insurance policy or a policy that covers hired and non-owned vehicles. Adding commercial umbrella insurance to those policies can help cover costs in the event that someone sues you for damages caused by one of your vehicles.
Employee injury lawsuits – Having an umbrella policy on top of employers liability insurance (which is typically included in workers’ compensation insurance) will help pay for employee lawsuits brought on by work-related injuries caused by employer negligence.
What Isn’t Covered?
Although umbrella insurance can increase the liability limits of several other policies. It does not offer the complete safety net that a small business may require.
Umbrella policies do not cover the following:
Damages within the primary policy’s limits – Umbrella liability insurance does not kick in until the limits of the primary policy have been exhausted. As with any insurance, it only covers things up to the policy’s maximum.
Business property damage – Damage to your company’s property due to things like fire, theft, or certain types of weather can be covered by the commercial property insurance included in a business owner’s policy (BOP) or commercial package policy (CPP). Umbrella policies are extensions of existing liability insurance and you cannot buy them separately for property.
Professional errors – Malpractice insurance, also known as errors and omissions insurance (E&O) or professional liability insurance, protects professionals from legal action stemming from their own negligence or those of their clients. Excess liability insurance, also known as excess E&O insurance, is very similar to umbrella insurance. You can use it to increase the limits of this type of policy. But umbrella liability insurance will not cover this type of negligence.
Employee theft – If you want to protect your company financially from employee theft or fraud against customers or clients. You’ll need commercial crime insurance, also known as a fidelity bond.
Who Needs an Umbrella Liability Policy?
In general, the more face-to-face interaction your business has with your clients and customers, the greater your liability risks. In addition, if your employees are using dangerous equipment or heavy machinery, your business faces even more risks.
If the above is true for you, and you believe that the cost of a claim could exceed your liability limits, purchasing commercial umbrella insurance is something you should seriously consider doing. This coverage may be of useful for your business if:
You’re a general contractor and your client needs more coverage – Umbrella insurance is a stopgap measure for contracts worth more than $2 million. If you’re a general contractor, and your existing general liability policy has a $2 million per-occurrence limit, but your client contract requires a $5 million per-occurrence limit. You would add an umbrella policy with a $3 million per-occurrence limit.
You’re in contact with the public – The possibility of a customer sustaining a physical injury is increased when your establishment is open to the public. For instance, during business hours, wholesalers frequently use various pieces of machinery to restock the shelves of their warehouses. When using this kind of machinery in the presence of customers, there is a risk of injury. If someone gets hurt while on your property, you could be liable for expensive medical bills and lawsuits that exceed the limits of your general liability insurance.
You do work off site – Working away from the physical location of your company can also increase the liability risk it faces. For instance, if your employees are performing work at the residence of one of your customers, there is an increased possibility of property damage.
The Cost of Umbrella Liability Policies
The range of umbrella insurance policies available is very broad, with a significant gap between the lowest and highest limits of coverage. This makes sense, since no two businesses share the same set of risks. There are businesses that choose to purchase $1 million in supplemental coverage, and businesses that might even choose to purchase $100 million or more in coverage. The amount of coverage you choose, as well as other factors related to the type of business you run, the amount of employees you have, and your annual revenue, will determine how much an umbrella policy will cost you.
With that being said, prices can vary widely even between seemingly identical businesses. And keep in mind that without knowing your business, we can’t give you exact quotes, so speak to an EZ agent to find out what you can expect to pay. But to give an example, let’s say your small business is looking for $1 million in coverage. With a $1 million policy, the highest premium costs average around $208 a month, or $2,500 for the year. Generally businesses with higher risks pay the most in premiums; this typically includes doctors, lawyers, and construction companies. On the opposite end of the spectrum, for less risky businesses such as cleaning services, you would pay around $33 a month. Or $400 for the year.
How Much Coverage Do I Need?
If you have a business that is contracted out by clients, and you have a contract with a client that requires a liability limit higher than $2 million, you will typically purchase an umbrella policy to meet that limit. It’s not unusual to see contracts worth $5 million or more. In that case, you buy a $3 million umbrella policy in addition to a $2 million primary policy. Otherwise, the amount of coverage you choose should be tailored to the specifics of your business and its industry.
Keep these three things in mind as you browse umbrella insurance quotes:
Your coverage should match your assets – To have enough coverage, your coverage needs to match your assets. So, if your entire company’s net worth is $1 million, that’s how much coverage you need.
Umbrella liability starts at a minimum of $1 million – You cannot purchase an umbrella liability policy with a coverage limit of less than this amount.
Umbrella liability coverage comes in increments of $1 million – You can only increase your liability coverage in increments of $1 million, allowing you to acquire precisely the amount of protection you need.
The Difference Between Umbrella Liability and Excess Liability
There is a common misunderstanding that commercial umbrella insurance and excess liability insurance are the same thing. You can purchase excess liability insurance to supplement either – and only – your existing general liability insurance or errors and omissions insurance (E&O) policy. Your supplemental plan will only provide extra coverage to the specific plan you purchase it for. For example, if you buy excess liability for your general liability policy. It will only provide extra coverage for your general liability claims. But if you purchase an umbrella policy, you will have extra coverage for all of your other liability policies in one supplemental policy.
Working With EZ
Get in touch with an EZ agent if you want to compare commercial insurance policies and prices quickly and easily. If you need assistance making sure your business has enough coverage our agents are available to assist you at no cost. We’ll take a look at your long-term financial plans and insurance requirements, then recommend the best policies for you. Enter your zip code in the box below to get a free instant quote. Or give us a call at 877-670-3538 to speak with a live agent.
Just one single lawsuit can damage your business beyond repair, so there’s no doubt that you need liability insurance. But it can be a challenge to figure out what kind of commercial insurance your business needs. Different policies cover different risks and claims; in fact, one of the most common questions from small business owners is “What’s the difference between general liability and professional liability insurance?” Both cover different types of risks, and figuring out how each works can be confusing. Understanding how they compare will help you make the best decision for your business. You might even need both!
What Is General Liability Insurance?
Court, attorney fees and settlements will be covered under general liability insurance.
General liability insurance is the most basic kind of commercial insurance. It covers costs if a third party accuses your business of causing them physical harm, damaging their property, harming their reputation through slander, or advertising errors that infringe on their copyright. These policies are usually written on an “occurrence” basis, which means that all losses will be covered during the time of the policy period, regardless of when you file the claim. General liability insurance will cover expenses including:
Professional liability insurance, which includes errors and omissions, or E&O, insurance, covers legal defense if a third party claims they suffered a financial loss as a result of your negligence. It is written on a “claims made” basis, which means that the damages had to have occurred within the active policy period or they will not be covered. Some of the claims that professional liability insurance covers include:
Negligence
Inaccurate professional advice
Failure to uphold contractual promises
Work that was not completed
Work mistakes or omissions
Both insurance policies will cover you in the event of any damages to third parties.
Coverage will typically pay for:
Attorney’s fees
Court costs
Investigator’s bills
Settlements
Judgements
How They Are Similar
Both protect against business liabilities and cover:
Damage to third parties.
Accidental damage, not intentional damage
Restricted coverage within a specific area; if you go outside that area you will not be covered.
How They Differ
The main difference between general liability and professional liability insurance is the risks they cover. General liability insurance will cover physical risks, like bodily injuries or property damage caused by your business’ daily operations. Professional liability covers financial losses resulting from negligence, errors, or omissions that occur when you provide your services to others.
Who Needs General Liability Insurance?
Every business owner should consider buying a general liability insurance plan to protect their assets. Accidents happen, and when you own a business, these accidents can be quite costly. You should consider general liability insurance if you:
If you have a home based business, then general liability is necessary. If you provide professional services or advice, then professional liability is necessary.
Have customers visiting your location.
Rent a physical location.
Handle other people’s property.
Own a home-based business.
Sell, manufacturer, or distribute products.
Advertise your services.
Who Needs Professional Liability Insurance?
Professional liability insurance is important to consider if your business provides professional services and has specialized professional training. Some professionals might even be legally required to obtain this type of insurance. You should consider a professional liability insurance plan if you:
Provide professional or technical services or advice.
Are expected to maintain professional standards.
Some examples of people who should have professional liability insurance are lawyers, consultants, accountants, and technology inspectors.
Which Do You Need?
In many cases, you will need both policies to fully protect your business from an unexpected lawsuit. EZ.Insure provides licensed agents who are highly trained in commercial insurance and can help determine which policy better suits your business, or if you need the coverage of both types. We will compare all plans and find the plan that offers the most coverage at the best price. To get free quotes, simply enter your zip code in the bar above, or to speak with one of our specialized agents, call 888-615-4893.
Businesses grow and change all the time, which means that, at some point, you might need to modify your commercial insurance policies. While your policies are contracts, they are not completely set in stone. An insurance endorsement can add, take away, or exclude certain types of coverage. While some endorsements are added by your insurance company to minimize their risk, others can be beneficial because they allow you, the business owner, to customize your policies, which could save you money. For example, if you find that your policy has something that you do not need, you can request an endorsement to remove it. On the other hand, there might come a time when you need to extend your policy so that your business is fully covered. In this case, you can request an endorsement to add certain types of coverage.
Endorsements Explained
Endorsements are documents that are attached to your original insurance policy and are only good for that particular policy’s period. Some endorsements are added by your insurance company and can either exclude certain things from being covered or clarify what is covered by a policy. For example, some commercial property insurance policies have a wind and hail deductible endorsement, which requires you to pay a separate deductible in the case of wind or hail damage, while some general liability policies have exclusions for damages resulting from exposure to asbestos. Some endorsements clarify what is covered, such as a professional service exclusion, which makes clear that your general liability policy only covers bodily and property damage, not damage caused by professional advice.
As previously mentioned, other endorsements are additions that you can request for your policy. These changes can allow your business to grow and change while still remaining fully covered by your insurance policy. For example, if you change your business’s address, add another location, or add a new product, then you can make changes to your policy without the risk of losing insurance coverage.
Common Endorsements
There are some common endorsements that you might want to consider for your business:
Adding locations and increasing your limits can be done with adding endorsements to provide more liability coverage.
Additional Insured– This is most often paired with a general liability insurance policy and allows you to add a third party to your policy, such as a subcontractor who is doing work for you.
Adding/Changing Location– You can request endorsements to make administrative changes to your policy, such as a change of address or a change in the policyholder’s name. You can also add locations to your policy coverage; this will protect your new location and your current location.
Extended Reporting Period– This will give you the ability to report claims after the expiration date of your insurance policy on a claims-made professional liability policy, or on an error and omissions insurance policy.
Increased Limits– This endorsement allows you to increase your limit of liability for your business property, as well as to extend workers’ compensation benefits not covered by state law.
Industry-Specific Endorsements- You can also add coverage that is specific to your industry with certain endorsements, such as a contractor’s enhancement endorsement. These endorsements will cover equipment, property, and other tools specific to your industry, and at a cheaper rate than if purchased individually.
Adding An Endorsement
Adding endorsements to existing policies is a great way to continue your coverage as your business continues to grow. You can personalize your policies to add endorsements that fit your business’ needs. Adding them is easy: simply speak to your current agent, and ask that they be added when your policy renews, or when you are shopping for a new policy.
It can be confusing to know just how much coverage you need for your growing business. EZ.Insure specializes in breaking down your needs and your risks. We will provide you with a trained, licensed agent who will compare business insurance quotes in minutes. We aim to find you the most coverage with the most savings, all at no cost to you. To get free quotes, simply enter your zip code in the bar above, or to speak directly with an agent, call 888-615-4893.
You have probably heard or read about something like this in the news- a large company is hacked, leading to a major data breach. For example, not too long ago, big box store Target was the victim of a hacker, and thousands of customers had their sensitive information exposed. Fortunately for big companies like Target, they are large enough to survive a cyber liability lawsuit. Unfortunately, many small businesses aren’t so lucky. In fact, more than 60% of small businesses go under within 6 months of a cyberattack. Cyber liability breaches (and claims) come with expensive legal settlements and large fines, not to mention damage to your reputation and brand. It is important to have the right cyber liability insurance policy, because recovering from a cyber security breach can drain your business’s time and money.
How Much Can Cyber Claims Cost Your Business?
A data breach can cost your business thousands, even millions of dollars.
Data breaches can cost your business an enormous amount of money. There is a lot you need to do in the case of breach, which all adds up. You have to notify all of your customers whose information was affected as soon as possible (as required by state law). You must also investigate and correct the breach, which can cost a lot of money, and take months or even years. A study from the IBM/Ponemon Institute found that data breaches cost businesses $242 per stolen record on average. That means the average U.S. data breach costs more than $8 million.
The reason cyber liability claims cost so much is that they include the costs of:
Finding and repairing the cause of the breach– Hiring an expert can cost anywhere from $200 to $2,000 per hour.
Notifying customers– Contacting the affected parties can cost anywhere from $1 to $5 per notice.
Credit monitoring for affected customers for two to three years– This can cost anywhere from $10 to $30 per individual, and needs to continue for at least 2 years.
Fines or penalties
Client’s financial losses if you are sued– The average cost for legal defense is $740,000, while the average legal settlement is about $2 million.
Defense costs and legal fees
What Cyber Liability Insurance Covers
While some small business owners might think that cyber liability insurance is only necessary for big companies, this couldn’t be further from the truth. Any business, no matter the size, can be hacked, and a network failure or breach can end up costing you hundreds of thousands of dollars. Any business that operates online and handles sensitive information needs cyber liability insurance. For example, if customers use credit cards to pay for your services on your site, then you are at risk of a breach.
Cyber insurance provides protection for your business from financial losses as well as the cost of data loss to your customers. It covers:
Cyber Extortion– If a hacker accesses your database and is holding it for ransom, cyber liability insurance will help recover those losses.
Forensic Support– Your policy will cover investigation-related expenses and consultation fees.
Legal Fees– Cyber liability insurance helps pay for legal help and advice when dealing with a lawsuit brought by clients or staff.
Business Interruption– A data breach affects your day-to-day operations, which leads to additional losses of income and revenue. Cyber liability can help cover these losses.
Different Cyber Liability Insurance
There are two kinds of cyber liability coverage:
First-party cyber liability insurance covers costs from a cyberattack or data breach on your own network or systems.
Third-party cyber liability insurance protects businesses from lawsuits related to a cyber incident that affects a client.
Cyber liability insurance might seem pricey, but when considering the cost of cyber liability claims, it is a necessary expense. If you are worried about the cost, remember that there are many different plans that can be tailored to your specific business and needs. You can choose how much coverage you need and how much you can afford to spend. Most business owners add first-party cyber liability insurance coverage to their general liability policy, so you might be able to get a deal if you bundle your policies.
If you are interested in cyber liability insurance, and do not know where to start or what type of coverage you need, EZ can help. EZ.Insure understands just how important it is to protect customer’s information. We will provide you with an agent to help you find the right plan to fully cover you and protect your customers’ privacy. Your agent will compare quotes from all plans available in your area, and find the best plan at the best price. Even having the best cybersecurity does not completely eliminate the risk of a data breach, so it is best to protect your business with insurance. To get instant free quotes, simply enter your zip code in the bar above, or to speak directly to an agent, call 888-615-4893.
When you own a small business that offers advice or services, there’s always a risk of lawsuits due to errors and omissions. Even if you have done your job to the best of your ability, something can still go wrong. Sometimes customers just aren’t happy with your work, and they could decide to sue your business. However, a lot of errors and omissions (E&O) claims can be resolved before they become costly lawsuits. In order to prevent, or quickly resolve, any errors and omissions claims made against your business, you have to know what to expect. Here are the most common errors and omissions claims:
Breaking your contract can result in your customer losing money, in which they can sure you for.
Breach of Contract
If you have a verbal or written contract with a customer, you have to adhere to that contract. If a customer suffers any financial loss due to a breach of contract on your part, they can sue to recover their financial loss. For example, if you missed a deadline to put up a website for a company you’re under contract with, they can sue you for any money that they are losing while the site isn’t up and running. The types of breach of contract include:
Anticipatory breach– a business tells the customer that they will not be fulfilling the terms of their contract
Minor breach– a business fails to live up to a small detail in the contract.
Material or fundamental breach– a breach that is extreme enough to nullify the contract completely.
Misrepresentation
One of the biggest mistakes that businesses can make is overstating their expertise, promising their clients something they cannot deliver, or not fully disclosing information. If your company misrepresents itself or doesn’t disclose information, resulting in financial or reputational loss to the customer, then you can expect a lawsuit to follow. The lawsuit will be labeled as intentional or fraudulent misrepresentation. For example, if a car dealer lies about the history of a used car and their customer later finds out their car was in an accident, this would be considered fraudulent misrepresentation.
If you lie or even partially lie, then you can be sued for misrepresentation.
If you’re not careful, you can be slapped with a lawsuit, no matter whether you have intentionally or unintentionally misrepresented your company. E&O misrepresentation claims can include:
Making a statement that is partially true.
Making a statement that is completely false.
Omitting details, or failing to disclose important information.
Negligence
Claims of negligence often occur when a business’ poor oversight leads to financial or even physical injury of another party. You could also be considered negligent if you communicate poorly with your customer, or if you fail to take reasonable care or control when providing your services. Even if you fully explain your prices and expected outcomes, a customer might form unrealistic expectations for your work. If you don’t meet their expectations, they might sue you.
Create a detailed contract that both parties review and sign before work begins. Include expectations about deadlines, payments and any other agreed-upon expectations between you and the customer.
Make sure that you document everything that you’re doing so that you can prove you are getting the work done.
Always keep an open communication with your clients, especially if something goes wrong while you are under contract, or if there is a minor glitch. Prioritize honesty and transparency with your customers and let them know if you are going to miss a deadline, so you can manage expectations and work together to solve the problem.
Errors and omissions insurance is the best way to protect your company from a lawsuit and reduce the risk of losing your business because of a mistake. If you are sued, E&O insurance will pay your legal costs such as attorney’s fees, court fees, and settlement costs. As long as your policy is active at the time of the incident, you will be protected. You do not want to wait until something happens in order to be insured. Make sure that your business is fully protected in the event of an incident by speaking to an EZ agent. To find an affordable plan that gets you the most coverage with the most savings, enter your zip code in the bar above, or to speak directly to a licensed agent in your area, call 888-615-4893.
