For Subscribers

Do I Need Errors and Omissions Insurance?

Insurance needs vary from business to business. Before you plunk down your cash, make sure you have to.

By Paul and Sarah Edwards

Opinions expressed by Entrepreneur contributors are their own.

Q: I want to start a smallhomebased business to supplement my retirement income. I am findingthe cost of errors and omissions (E&O) insurance is prohibitivefor homebased businesses (we got one quote of $2,000), but veryreasonable for larger, conventional businesses. Why can't Ifind E&O coverage at a reasonable rate?

A: Before you start shoppingfor E&O insurance, answer this question: How real is your needfor E&O insurance? Does the type of work you plan to do entailmuch potential for liability? If technology is involved-like beingresponsible for multimedia arrangements at sales presentations-thenwe would say yes. But some types of businesses allow you instead tocreate a client agreement that protects you, making the clientassume the risk. I would not do this without having an attorneyinvolved who can help you determine whether such a clause wouldscare away clients. If, on the other hand, contracts in yourindustry require E&O coverage, provide a warranty or guarantee,or have clauses that require you to indemnify or hold harmless yourclients, you need to start shopping.

Continue reading this article — and all of our other premium content with Entrepreneur+

For just $5, you can get unlimited access to all Entrepreneur’s premium content. You’ll find:

  • Digestible insight on how to be a better entrepreneur and leader
  • Lessons for starting and growing a business from our expert network of CEOs and founders
  • Meaningful content to help you make sharper decisions
  • Business and life hacks to help you stay ahead of the curve

Related Topics

Editor's Pick

Have More Responsibilities at Work, But No Pay Bump? Use This Script to Get the Raise You Deserve.
Black and Asian Founders Face Opposition at All Levels — Here's Why That Has to Change

Invest in Yourself: 10 Things Every Working Woman Should Do This Year

When striving for success, it is easy to forget about your mental and physical health. But without health, you cannot fully succeed. Follow these ten lifestyle strategies for success in your personal and professional life.

Business News

This OnlyFans Star Was Once Part of a Fanatical MLM Cult. "I Was Forced Into Celibacy."

Cami Strella was lured into a multilevel marketing scheme but escaped to start her own six-figure-a-month business.


This Is the Overlooked Tool Your Business Needs to Reach Your Target Audience

Voice search is growing, and your business can utilize this important functionality to get more customers. Here's how.

Thought Leaders

5 Small Daily Habits Self-Made Millionaires Use to Grow Their Wealth

We've all seen what self-made millionaires look like on TV, but it's a lot more subtle than that. Brian Tracy researched what small daily habits these successful entrepreneurs adopted on their journey from rags to riches.

Business Ideas

How to Make Thousands of Dollars on the Side As a Virtual Assistant

Apply your skills and experience to create a lucrative virtual assistant side hustle or full-time business.