Business insurance can be difficult to understand if youre not involved in accounting or law. When youre in the early stages of starting a business, trying to be sure that your assets are protected in the unfortunate event of a
mishap or a lawsuit is an added source of stress, in addition to attempting to decipher all the other complexities involved in setting up your new venture.
Its advisable to speak with an accountant or an attorney during the startup phases, because they can provide professional advice in a number of different areas related to running your business. It is possible, however, to
have a basic understanding of what business insurance is, what different types are available, and which types you might need before meeting with an accountant or attorney, and by doing so, you will be in a better position to
have a clear discussion with your advisor regarding the pros and cons of your various options.
What Are the Different Types of Business Insurance?
There are four general types of business insurance: Property, Liability, Workers Compensation and Specialized Liability Insurance. Property Insurance is needed to protect any buildings or other property owned by the
business, and is typically not needed by consultants, unless you operate out of a physical office that is owned by you, or if you use specialized equipment that is very expensive.
Workers Compensation insurance is needed only if you have employees, and is used to protect you against claims filed by employees who were injured on the job. This coverage will cover medical costs to pay for treatment of
injuries received on the job, as well as lost wages due to the employee not being able to report to work as a result of the injury.
General liability insurance covers against injury or property damage caused by mistakes that you made during the course of doing your job. Every business should carry general liability insurance as a precaution.
There are a few types of specialized liability insurance, including Errors & Omissions Insurance, also known as Professional Liability Insurance, Employment Practices Liability Insurance, and Directors & Officers Insurance. As
an independent contractor, a specialized liability insurance you might need to be concerned with is Errors & Omissions Insurance. Errors & Omissions Insurance protects you against claims filed as a result of errors or
mistakes you made in the course of doing your job, your failure to complete work as outlined in a contract, or the failure of your work to perform as outlined in a contract. It may or may not be necessary for you to carry Errors
& Omissions Insurance, depending on the industry in which you consult. Consult your legal advisor to be sure.
How Do I Know If I Need Professional Liability Insurance (Errors and Omissions Insurance?)
Professional service providers such as financial advisors, attorneys, insurance agencies, and accountants should also carry E&O. Other professions that might consider carrying errors and omissions insurance include IT
professionals, programmers, project managers, web and graphic designers, real estate agents, consultants, home inspectors, architects, and engineers. Professions such as software engineering are also subject to E&O.
No comments:
Post a Comment