If you are a consultant or dole out professional advice, there are more to your insurance needs than just general liability coverage. As a professional service provider, your guidance is seen as more valuable, which means you can be held accountable in the event of your client’s financial loss. If your client can prove that your error or neglect led to a financial loss, your business can be held responsible. General liability helps you in situations of bodily injury or property damage, but Errors and Omissions insurance covers against professional errors or negligence.
If you know your clients could sue you for damages resulting from your error or negligence, you should most definitely consider this insurance. In Ontario, E&O insurance is mandatory for some professionals, such as for:
In some industries—such as engineering and architecture—Errors and Omissions insurance is often referred to as professional liability insurance; however, these terms are often used interchangeably. Similar coverage available for physicians is called medical malpractice insurance, and is fundamentally different from other types of professional liability in that bodily injury is covered.
When you are advertising yourself as an advisor, your actions have consequences. Let’s be honest, no one is perfect and mistakes do happen. Make sure you have the right coverage in place so you are protected in the event of a lawsuit.
Think about it – you are working as a sales consultant, and you advise your client to shut down her website so that she only focuses on phone sales. Your client is hesitant, but you convince her that the rewards will be huge, and there is no way this plan can fail. Your client’s sales steadily drop over the next year, and she sues you because your advice caused her business to fail. You do not want this client to come after your assets, or have to pay out of pocket for legal fees. Errors and Omissions insurance is valuable in situations like these – which are much more common than you might think.
Errors and Omissions insurance does not just protect you if you do make an error or are negligent, but also if you have to defend that your actions were valid. As unfortunate as it is, clients do not always part on the best of terms. If they are upset, they may decide to bring a lawsuit against you. Even if you aren’t found liable, the sheer expense of defense fees, etc. can be monumental. For small businesses, these losses can prove to be too significant to recover from.
At Mitchell & Whale, our brokers have worked with a number of different clients requiring Errors and Omissions insurance. We work with you to find you a policy that is tailored to your business. Whether you are a one person operation or have bigger needs, we can find the right policy for you. If your Ontario business is in Whitby, Toronto, Sudbury or beyond, call us today for a quote!