Small Businesses Need E&O Insurance Too

Companies aren’t perfect. As much as we’d all prefer our businesses run like well-oiled machines, even the most finely tuned organization can make a mistake. If humans play a role in your business, the occasional mistake is virtually inevitable.

The good news is, that’s OK. It’s why we have insurance. Specifically, it’s why you should have errors and omissions (E&O) insurance. Knowing there is a strong likelihood of errors, you can establish proper coverage beforehand.

Here are some FAQs on E&O insurance:

What is it?

Errors and omissions insurance, also called malpractice insurance or professional liability insurance, covers you and/or your business in the event you’re held responsible for an undesired outcome of your services. If you or someone you employ makes an error or omission (or a perceived error or omission), this policy will cover you.

Who needs it?

E&O insurance is not just for professionals like lawyers, doctors, or accountants. If you provide a service for a fee (and that includes small businesses such as commercial printers, contractors, and Internet hosting companies), you should have this coverage in place.

What is covered?

If an error or omission causes financial loss for a client, E&O coverage provides protection. It pays for judgments, settlements, and defense costs. Without E&O insurance, companies leave themselves open to significant financial risk. And keep in mind, these losses are not covered under your general liability policy.

Even if a client’s allegations are eventually dismissed, you’ll spend thousands of dollars defending a lawsuit. If you must pay a settlement, you will pay defense costs plus the judgment amount. Such suits can bankrupt small companies and cripple larger ones.

When should I get E&O insurance?

The sooner the better. Don’t wait until you’ve experienced a significant loss before taking action. It’s always best to get insurance established before you take the risk. For some companies, this coverage can even be a selling point to clients.

What E&O policy is right for my business?

As with many aspects of business ownership, there is no one-size-fits-all answer. The E&O policy must be tailored to meet the demands and risks of your industry and the specific services you offer. For example, the same policy is not appropriate for a doctor as for a plumber. Work closely with your agent to determine your exposure and the E&O policy that is best for your specific circumstances.

How much does E&O insurance cost?

Because these policies are business-specific, E&O insurance premiums vary greatly. Your location, claims history, exposure, payout limits, and other variables all affect the cost of E&O insurance.

Consult with your agent today if you don’t currently have E&O as part of your insurance portfolio. He or she can help you review your needs and decide what coverage is appropriate for your company. As you review options, bear in mind the losses your company could suffer without this coverage. Ultimately, the cost of not having this policy far outweighs the premium cost.

Prepare Your Commercial Property for the Fall Season

Summer is ending, and the season change is a good time to review key items on or around your commercial property. Keeping tabs on these items each fall will help you avoid claims year-round. For healthy maintenance of your property, don’t head into storm season without checking:

The roof. Summer storms often cause roof damage. If it’s minor, it can go unnoticed – for now. But if missed, that minor damage can become a large problem over the winter. Take the opportunity to stop trouble before it starts. Give your roof a thorough inspection for potential problems down the road, then take care of any issues right now.

The HVAC system. Regardless of your heating needs, fall is a good time to check your HVAC system. In warmer climates, your AC probably had a good workout this past summer; it’s wise to ensure your system is still going strong as you end the season. For those in chillier regions, a professional tune-up will ensure you’re ready for the coming winter.

The trees. Is it trim time? Trees promote energy efficiency and add natural beauty to your property, but they should be properly pruned to remain healthy and safe. Look for any potential property damage or safety concerns. Did spring and summer growth bring limbs too close to roofs, windows, or power lines? Do your trees have any dead limbs that should be removed? Improve their structural integrity (and their aesthetic appeal) by trimming them each fall.

And be prepared. Now you can face fall.

New Season, New Insurance Needs?

Fall is a time for getting your ducks in a row and preparing for the future. As summer comes to a close, assess whether your insurance needs have changed. Review them by answering these questions:

Has your family changed? If you got married this summer, you may qualify for a discount on your auto policy. If you combined households, you may need to update your homeowners policy. If you’re newly divorced, be sure to update all your policies. If you had a baby, review your life insurance coverage to determine whether any changes are needed.

Did your household add or lose drivers? If your teen just acquired a drivers’ license, it’s typically cheaper if you add him or her to your policy than it is for the new driver to get a separate policy. Plus, you’ll likely receive a multi-policy discount. If your child has left the nest for college, you can usually adjust your policy to reduce coverage.

Have you renovated? Review any home projects you completed. Home additions or upgrades can drastically increase the value of your property. Consult with your agent to determine if your homeowners insurance is still adequate. Don’t forget to include structures you added to the outside of your home, such as gazebos or pools.

Are you now a renter or a landlord? If you’ve moved into a new rental, or if you’ve become a new landlord, be sure you have the right policies in place. As a tenant, you need renters insurance to cover your belongings, even if the owner has coverage for the building. As a landlord, ensure both property and liability coverages are adequate.

Did you retire? A major reduction in commute time could translate into a significant reduction in auto insurance premiums. Plus, your senior status may qualify you for a 55+ discount.

Report any of these life changes to your agent as soon as possible, and don’t take the chance of being underinsured.

Just Married? ‘Insure’ Your Future and Live Happily Ever After

If you tied the knot this summer, congratulations!

Marriage changes things forever, including your insurance needs. If you’re a newlywed, ensure you consider these issues now for a happily-ever-after future.

Multiple policies: As you combine your households, do the same for your insurance coverage. Most couples have separate policies, often with different companies. Combine multiple auto and home policies with one carrier to receive a multiline discount. It’s likely you’ll also qualify for a discount simply because you’re married. (It turns out marital bliss isn’t the only benefit to getting hitched.)

New home: Whether you’re moving into his place or her place or buying a new home together, now is a good time to review your homeowners coverage. A new location may mean new perils. Consult with your agent to make sure you include coverage for location-specific perils, such as hurricanes. Also important: discuss with your spouse whether you want replacement cost or actual cash value coverage.

Spouse discounts: Is your newly beloved a member of an alumni or another organization? If so, your household may now be eligible for a discount. Check with your agent to discover any savings available.

Policy limits: Review your homeowners policy to ensure you have the right protection for your personal belongings. Your household possessions may have just doubled, so your policy should have a sufficiently high limit to cover the increase. You may also now need a special rider for high-value items; make sure coverage is adequate for newly acquired gifts, and, naturally, those wedding rings!

Should You Shop Online or with an Agent? You Decide

While you may be tempted to search for a Medicare supplement policy online, it’s always advisable to buy through a licensed health insurance agent. Here’s why:

  • Expertise from a licensed agent costs you nothing. You pay the same premium for a supplement whether you buy online or use an agent.
  • You can explain any unusual circumstances, and ask questions such as: Is now a good time to switch plans? Is my doctor a covered provider under this new plan? Will my prescription copays change? Best of all, you’ll receive a timely response.
  • Your information is private. Some websites will sell your information, but it’s secure with your licensed insurance agent. He or she is only interested in helping you make the best health insurance choices.
  • Your agent is likely to offer more choices than most websites. If you’re on one insurance company’s website, you’ll only see its plans. Your agent may have access to many plans and can help you compare.
  • Rather than trying to solve a problem online, you can turn to your agent to advocate for you; you are very unlikely to get this assistance online.
  • Shopping online is time consuming. To meet with an agent, make one call and set up an appointment. He or she may even come to your home.

Your local agent supports your community, is right there when you need help. Thanks to the relationship you develop with your agent, they should be able to provide all the information you need to make this important decision.

Travel Insurance Is Crucial for Those 50+

In today’s uncertain world, a health travel insurance policy makes more sense than ever. But if you’re over 50, you definitely need to consider purchasing it before setting out abroad or on a cruise. Injuries and illnesses arise during travel, and ensuring you have the proper medical coverage to meet your needs is crucial.

New situations, different terrain, and riskier activities, such as parasailing or hiking excursions, can contribute to injuries, particular for older travelers. Even driving in a strange country can be a problem for many.

According to the Centers for Disease Control and Prevention, motor vehicle crashes are the top cause of death of U.S. citizens abroad.

Medicare and Medigap

If you have Medicare, your coverage applies in the U.S. wherever practitioners accept it. But if you have a Medicare or Medigap supplement, check with your supplemental insurer on overseas coverage. The Medicare.gov website offers travel coverage advice, and warns that Medigap policies have a lifetime travel emergency coverage limit of $50,000.

Evacuation and repatriation coverage

The best way to ensure you have the broadest coverage overseas is with a travel insurance policy. For example, travel insurance provides emergency evacuation and repatriation. If injured overseas, you (and your spouse) may want to return home for treatment and recuperation. This coverage goes beyond transporting you after an injury or illness. It includes advice, coordination of admission to a local facility, medical air transport and escort when needed, and ground transportation coordination at both ends of an evacuation; it also smooths immigration and flight clearances and assists with travel arrangements.

While some travel policies cover both medical and repatriation, you still may require two policies. Also, although some insurers offer coverage for a single trip, if you make frequent trips in the same year, an annual plan may be the best choice for you. Snowbirds in particular may benefit from this type of plan.

How to Calculate Your Life Insurance Needs

It’s hard to generalize when it comes to life insurance. What one family needs may differ drastically from what another family in similar circumstances requires.

How can you know if you have enough?

One way to determine how much life insurance you need is to peg it to 10 times your yearly income. This method, however, doesn’t provide much guidance to people who are not employed, such as stay-at-home parents.

If the spouse at home dies, the survivor may need life insurance funds to pay for the child care and home maintenance costs that had previously been provided free of charge.

A better way to come up with your specific number is to figure out exactly how much money your family will need at the time of your death.

Start with your family’s debt, which includes mortgages, auto loans, student loans, and credit-card debt. Determine your future cash needs – the monthly amount needed to sustain the household – as well as any major future expenses, such as tuition, new cars, medical bills, and estate-settlement costs.

Add these together, then subtract your current liquid assets – whatever your family currently has in savings, such as amounts in bank and brokerage accounts and tuition savings plans.

As an example, say you are married with two children (for example, ages 8 and 6) and earn $50,000 a year. If you were to die now, you’d want to support your spouse for 15 years, until your youngest child is out of college. To do this, you’ll need $750,000 in income replacement ($50,000 for 15 years), $200,000 for two college educations, and $5,000 for funeral costs.

But you also may want to pay off the $100,000 you owe on your mortgage, the $10,000 in car loans and the $5,000 in credit card debt. That takes your total to $1,070 million. From that total, subtract what you’ve saved, and that’s how much you will need in life insurance.