11 Ways to Completely Ruin Your Consulting Company Insurance
If you run a consulting business, there are a few things you should be aware of when it comes to your insurance coverage. Errors and Omissions, Workers’ compensation, bodily injury, and property damage are all areas that you should be aware of.
Errors and Omissions insurance
Errors and Omissions insurance, also known as professional liability insurance, protects professionals, consultants, and other business owners from lawsuits and damages. These claims are often brought by clients, who claim that the consultant’s work was inadequate or negligent. The costs of these lawsuits can be enormous. The cost of defending a legal case can be several thousand dollars.
The types of damages covered by E&O insurance vary depending on the type of work you do. For example, some clients may sue you for failing to disclose information about their home, while others may sue you for failing to keep their business open. Other clients may also file suits against you for discrimination.
Consulting businesses should have continuous E&O coverage. This means that coverage is available from the date of the omission, not just when the claim is made. Typically, policy limits range from $100,000 to $5 million. A higher limit is more appropriate for larger companies.
The deductible amount is another important aspect to consider. Insurance providers will generally offer a wide range of deductibles. This will affect your premiums. The more you can afford, the lower your premiums will be. The deductible can be as low as $1,000 or as high as $10,000.
A retroactive date is an important feature of an E&O insurance policy. The retroactive date is the first date that an eligible incident could occur after the policy’s inception date. It is not a good idea to change this date at each policy renewal.
Workers’ compensation
Consulting companies can get into trouble if they aren’t careful. This is especially true of companies that are new to the fray. Even the smallest of mistakes can cause significant financial damage.
For starters, workers compensation is mandated by law in most states. While there are some exceptions, such as independent contractors, it’s a good idea to have an insurance policy on hand. Not only does it provide your staff with monetary compensation should they become injured on the job, it also provides your business with a degree of protection. Of course, you’ll need to keep in mind that the price of your premium will depend on the size of your company and your exposure to risk.
For most businesses, a small worker insurance premium is no big deal. It’s easy to compare quotes and find the best rate. Aside from the obvious benefit of having a safety net, a consulting firm can also save money by using a private insurer to fill in the gaps. In fact, many carriers offer two payment options to meet your needs.
A workers’ compensation plan is a wise move for any consulting company, whether you have a single employee or a dozen. In addition to covering medical costs in the event of a work-related injury, the plan can also provide your employees with a nice bonus.