If a marketing consultant suggests a campaign which goes off-track, the firm may face a lot of backlash from the market and their customer base. Now, since a marketing consultant was involved in the ideation of the campaign, the firm might file a defamation lawsuit against the consultant. Clearly, the slightest of errors could cause your client to lose a lot of money and reputation, which would eventually lead them to sue you for damages.
To protect your company, you should look into business insurance, especially E&O Insurance, is very beneficial. Error and Omissions Insurance is one of the most important types of business insurance to invest in if you are a consultant. Since the cost of this insurance can be a bit high, business consultants often tend to overlook it. Here’s why you need to hold E&O insurance.
Business contracts do not replace insurance coverage
Often, business consultants overlook E&O insurance since they feel that a business contract will protect them against any lawsuits. They try to include as many terms and conditions in the contract hoping that it’ll cover any negligence or errors. However, business contracts do not always protect consultants against such scenarios. Unless your business contract is thoroughly reviewed by a legal counsel, there will be loopholes in it that the firm can use against you in an unfortunate scenario.
Even then, a business contract doesn’t always help you stay secure. When you consult with a legal counsel, even after thorough reviews of the contract, they will suggest that you insure your business with E&O insurance coverage. Even if your contract protects you against any damages, you will still need to pay for legal fees. Plus, in some unfortunate events, a firm could sue you regardless of whether you made a mistake or not. E&O insurance will help you take care of all such issues.
How does E&O insurance secure your consultancy?
With E&O insurance in hand, the financial costs associated with any lawsuits against your consultancy will be taken care of seamlessly. Whether it’s your legal fees or damages to be paid to the client, your E&O insurance will help you pay all of that without incurring any heavy financial losses. This way, your revenue stays in your business account, and you wouldn’t need to pay for anything directly from your cash inventory.
Generally, E&O insurance will secure you in cases of
- General negligence
- Unintentional or intentional mistakes
- Infringement of good faith
- Inaccurate advice
How much can an E&O insurance cost you?
No matter the industry you are in, your level of exposure could be reasonably high in the consultancy business. This high exposure is what requires you to invest smartly in E&O insurance. Numerous insurance agencies allow business consultants to purchase E&O insurance at about ten dollars a day. Depending upon the risk that your industry carries, you might want to increase this contribution.
Remember, if you are stuck in a lawsuit and the damages asked for far exceed your policy’s liability limit, you will need to pay for the difference on your own. For example, if the liability limit on your E&O insurance is $600,000 and the damages claimed by your client stand at a figure of $2,000,000, you will need to pay for the remaining $1,400,000 from other means such as your savings account, business account, etc. Thus, it is highly recommended that you contribute smartly to your E&O insurance instead of just going for the lowest possible figure allowed by your insurance provider.
Business consultancy is both a rewarding and high-risk industry to be in. Even an infringement of good faith can lead to your client filing a lawsuit against you. In such cases, you must take good measures to secure not just your financial stability but also your reputation.
We highly recommend getting all your business contracts thoroughly reviewed by your legal counsel. Even after that, contributing smartly to E&O insurance will help you secure yourself against all unfortunate and unforeseen damages.
E&O insurance is slowly gaining the popularity and importance that it deserves. In fact, many companies now require you to have E&O insurance before you can begin consulting them on their business.
Considering this, holding on to a solid and reasonable E&O insurance plan can prevent you from losing business opportunities as well as secure your consultancy against any future hassles. Visit bizinsure.com to know more about E&O insurance.