Insurance is a highly important part of running a business. Not only is a business and investment in the future, it is the business owners main source of income. As such, this source of revenue needs to be protected at all costs. Disasters and unforeseen events can and do happen, and this is why a business owner needs variety of different types of insurance coverage. This includes more than just liability, as it should also include Error and Omission Insurances.
This type of insurance may not be needed for every type of business, but it is extremely important for those involved in the financial services industry. There is a lot of the risk when it comes to investing other people’s money or managing their wealth and assets. Mistakes can cost a lot of money, whether it is a missed investment opportunity or a clerical error in paperwork or standard data entry. For example, in missed zero or and misplaced number can have serious financial consequences. In stock and options trading, this is quite often referred to as a fat-fingered error.
These types of problems can not only cost a lot of money, but it can put a financial services company or broker at risk of a lawsuit. Errors and omissions insurances is one way to safely avoid having to pay for the resulting litigation out-of-pocket. In many ways, this is slightly similar to a doctor’s malpractice insurance, but only when comparing the general concepts and objectives of the insurance policy.