Marketing consultancy is a profession that can be rewarding and lucrative, but at the same time, it is not free of risks. In the course of your business, you are bound to meet clients that are not happy with the services you have provided in one way or another. This is why the right insurance is so vital for your marketing consultancy business.
This is where E&O insurance comes in. It stands for Errors and Omissions Insurance, and it is one of the most important insurance policies that marketing consultants should have. With BizInsure, you can be certain that you are covered by the right E&O insurance that best suits your needs as a professional giving out advice to your clients.
Here, we will learn more about E&O insurance, what it covers and what it doesn’t, why it is so important for marketing consultants, and the factors that could affect its cost.
What does E&O Insurance cover?
Marketing consultants often wear many hats, and facing risks has become part and parcel of their job. You can never be a 100 per cent positive that you will never face a lawsuit from clients and that every project will go smoothly, which is why insurance is so crucial.
No matter how good you are at your job, trying to please every single client is not possible. There will be a conflict of interests, and sometimes, things may take an ugly turn. If you face a claim for actual or alleged negligent acts, errors, or omissions during the course of your business, having the right E&O insurance can keep your business protected. It covers legal costs and compensations that you may have to pay.
So, E&O insurance helps protect your marketing consultancy practice from various claims, including:
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Negligence
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Inaccurate advice and errors
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Omissions
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Misrepresentation
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Personal injury, such as libel and slander
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Violation of good faith and fair dealing
E&O insurance covers your legal fees, which can cost thousands of dollars in court expenses such as paying for expert witnesses or reserving a courtroom. It also covers administrative costs that you will need to put your defence team together. This coverage can help pay the court staff, including office managers, legal assistants, receptionists, court reporters, as well as settlements and judgments, which can be very expensive.
Knowing that you are covered by E&O insurance means that you don’t have to worry about paying for these expensive costs from your own pocket. You can rest assured that your insurance has got you covered.
What is not covered by E&O Insurance?
The following are not covered by E&O insurance.
Illegal acts
Errors and omissions insurance does not cover intentional illegal acts. If you intentionally break the law knowing fully well that your actions or advice are wrong, you are outside the protection of this insurance.
Wrongdoings on purpose
If you have intentionally misled your clients by giving them advice that you know is wrong or won’t benefit them, the E&O insurance won’t cover you.
Employee claims
These include claims that may be related to employment practices and work-related injuries and illnesses. You will need employment practices liability insurance or workers’ compensation insurance policy to cover such claims.
General liability claims
E&O insurance does not include third-party injury to an individual or property damage claims that are made against your business. A general liability insurance covers such claims.
Claims from events occurring before your policy date
Only events on or after the insurance policy effective date are covered by the E&O insurance. If you want to include claims before the policy date, you will have to add a retroactive date to your insurance policy.
Why do you need E&O insurance?
As a marketing consultant, you need errors and omission insurance to protect yourself and your business from claims of errors, oversights and/or omissions in the professional services that you provide to your clients. This coverage provides you, your employees and your firm protection if you are sued for professional negligence.
There are various situations where a client may want to hit you with a lawsuit. Perhaps you gave them advice that didn’t turn out well for them, or maybe you failed to meet expectations. Such events can result in ugly litigation, but when you have E&O insurance to cover you, you can have peace of mind knowing that you and your business are protected.
Even if a claim made against you is unfounded and you don’t have to pay settlements or compensation, you still have to pay for your defence and court costs. E&O insurance covers these too.
Factors affecting cost of E&O Insurance
There are a number of factors that can affect your errors and omissions insurance cost. Let us take a look at these factors below:
Business risk
If your industry is associated with higher risks, your E&O insurance will cost more. Marketing consultancy is generally considered a medium-risk industry, so your insurance costs will likely be very affordable.
Coverage limits
If you have high policy limits, it means you also have more coverage. This translates to higher premiums in most cases.
Claims history
Your E&O coverage may cost more if your business has had a history of liability claims.
Location
Your marketing consultancy business location also impacts the cost of your E&O insurance. If you live in a huge city with lots of economic activities, you are likely to pay more.
To help keep your E&O insurance cost down, you should always train your employees, check your contracting system for quality control, and communicate with your customers regularly about issues to make sure they’re satisfied.
Today, we see plenty of claims against those delivering professional services, including marketing consultants. You never know when a client you have worked with will allege that your advice and actions have caused them loss or damage.
Errors and omissions insurance protect you against damages from your acts, errors, or omissions in providing professional services. BizInsure can help you choose suitable E&O insurance suited to your needs and goals, and protect you and your marketing consultancy business from being damaged in an increasingly litigious business world.