The Challenge of Errors and Omissions Insurance

I am launching my own business. Next year will be the official start of my business but I have my business cards already, letterhead and my website is in progress.

Things are coming together except for one thing – Errors and Omissions Insurance.

One would carry this insurance to cover the fall out of making a mistake like a miscalculation or if there was an audit by the CRA (the Canadian equivalent to the IRS for my American readers). If the error was my fault I could be held liable and would have to pay the penalties for my client.

This to me is a very important thing to carry. I’m confident in my abilities however mistakes happen and I would like to have coverage in the case of a “very big oops.

So for the past few months I have spent applying to 7 different insurance companies. 2 of them came back with coverage between $1,500 and $2,000 per year. Ouch, in my mind for some reason I had about $500 maximum as a reasonable amount for a year for coverage. Plus that is how much I pay for my car insurance! That seems more risky to me then the work I am trying to do.

5 of the 7 companies declined quotes because by business is too new, my business is too risky, I do not have the proper education to work in the field I am entering and no reason given.

This is interesting, I want to start a business and carry the proper insurance but I can’t get the proper insurance until I have started a business and have established myself.

I feel as if applying for this insurance is showing companies that I am responsible and trying to run my business with risks evaluated, and the proper precautions in place.

Apparently I am wrong. I think I will have to take the risk and start the business without the insurance (which makes me nervous) but then when I am established it might be easier to obtain this insurance.

Has anyone out there had this issue? What did you do or do you have any recommendations for companies that provide this type of insurance it would be greatly appreciated. I might need some help and guidance!

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