Chapter 3: How to Avoid Lawsuits from Small Business Clients
Part 5: Professional Liability Insurance: A Last Line of Defense
Professional Liability Insurance, otherwise known as Errors and Omissions Insurance, serves your accounting practice in two ways:
- It makes you appear more credible and trustworthy, which is something that small-business owners want. It shows that you have backing by an insurance company in case a mistake leads to financial loss. This lets business owners breathe a little easier and makes you a more appealing option for their accounting needs.
- It covers professional liability claims, including lawsuits. Though the hope is that you won't have to use your policy, you don't want to risk losing your livelihood and your business because of an angry client.
If all your efforts to prevent a suit fall short, your insurance can help pay for attorneys' fees, court costs, and judgments or settlements .
Every effort should be taken to avoid a lawsuit, make no mistake. But if a lawsuit does occur, having Errors and Omissions Insurance can be a lifesaver. The policy provides the funds for an attorney right away, which means your legal advisor can try to get the suit dismissed. The ability to act quickly may spare you from going to court at all. Plus, the peace of mind a policy affords is indispensible for any professional accountant.
If you're sued over your work, your E&O Insurance can cover the legal costs.