Mitigating Risks: Errors and Omissions Insurance Tips for Your Small Business

OlufisayoOctober 28, 20131771 views

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In some ways, Canadian society follows the cultural lead of the United States.

A case in point would be the way Canadians are more willing than ever today to take one another to court over minor matters. This tendency exposes small businesses to considerable risk. A small business could be wiped out by one unsatisfied customer taking them to court.

Unfortunately, with perhaps the exception of healthcare businesses, small business owners haven’t kept up with the changes around them. Most have never heard of errors and omissions insurance; fewer, still, know how to purchase such an insurance policy.

Mitigating Risks

What kind of insurance do you really need?

Errors and omissions insurance is intended for business owners, to protect them against lawsuits that charge them with neglect or professional error. Clinics and hospitals have used this kind of insurance for a long time. In that field, it’s called medical malpractice insurance.

What kind of errors and omissions could occur in a business?

If you are a busy business with many customers, sooner or later, someone or the other in your business will make every kind of mistake that it’s possible to make.

A worker could reveal a customer’s personal information to someone else.
If your business involves working on other people’s property – say, like a home improvement business – one of your workers could accidentally damage an antique.
If yours is an IT services business, your clients could blame you when shortcomings in the software or services that you provide them with cause their computer systems malfunction.

If you have errors and omissions insurance, it would protect you from the consequences of any lawsuit against you for such mistakes – even frivolous lawsuits by gold-diggers.

What kinds of businesses really need errors and omissions insurance?

Some kinds of business are frequently at risk of being sued for shortfall of service – realty businesses, healthcare businesses, personal finance advisors and lawyers, for instance. Other kinds of businesses could be at risk, too. A florist’s business may not sound like a hotspot for litigious behavior. A lawsuit can happen in any business, though. You could, for instance, accidentally send the wrong kind of flowers to someone, have them cause an allergic reaction and get sued for trying to kill them.

Before you buy errors and omissions insurance, you need to do make inquiries about the premiums involved, by speaking with professionals at advisory services like kanetix.ca. Then, you need to perform a risk-benefit analysis. The basic question that you need to ask yourself is this – if you do get sued and lose the lawsuit, would it wipe your business out?

Trying to minimize your chances of being sued is a good plan, too

Whether you decide to buy errors and omissions insurance or not, you should do everything in your power to protect yourself from the possibility of a lawsuit.

You need to be very open to customer complaints. Giving aggrieved customers a quick answer can often head off any serious trouble. You need to make sure that you have a well-serviced toll-free number and email account.
Sometimes, lawsuits can arise from situations where your workers make promises that they can’t keep. You need to train your workers to make sure that they only make promises that they can absolutely deliver on.

Finally, the more organized you are, the better in control of your business you can be. Make sure that you run a fully computerized business.

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