I received a quote from my insurance company for E&O coverage for my business. Initially I held off purchasing liability insurance until my business started growing. I am being presented with 4 tiers of limits of liability with a matching premium, liability ranging from $250,000 to $1,000,000. Humm. I would love to hear feedback regarding how much liability others are carrying in their virtual assistant practices.

Thank you in advance for responding. I must move forward with protecting my practice.

Hi Brenda -

I could be wrong in how it works for businesses such as ours, but I know that in the corporate environment that the insurance company seems to dicate the amount of coverage that they will insure you for. Just last month I went through this exercise. We were trying to get one of our subsidiaries insured and the amount of coverage was directly related to the amount of revenue that the company would be generating.

It may be completely different for business such as ours...but he's considered a small business as well. Only he and one other person and they will operate as an LLC.

I'm sorry, I know that this doesn't answer your question directly, but I hope that it provides some guidance. Please let us know what you find out!

Blessings!
Pam

I provide bookkeeping services and only have 4 clients so I opted for the minimum (which they allowed...)

__________________
Lily Chambers, The Virtual Office Goddess, LLC
Author "How to Do Your Own Small Business Bookkeeping"

Oh good. Glad that worked out for you. I hope it's ok to ask - but was it terribly expensive?

Thanks Pam for getting back to me with your feedback.

Originally Posted by Pam Blackm

Oh good. Glad that worked out for you. I hope it's ok to ask - but was it terribly expensive?

Not really - approx $500/year which is within my financial capabilities right now...

__________________
Lily Chambers, The Virtual Office Goddess, LLC
Author "How to Do Your Own Small Business Bookkeeping"

Just curious, for what types of services would E&O insurance be necessary? I'm sure it would be needed for services such as bookkeeping or other areas where an error could get the client into legal trouble. But what if you are just creating databases, documents (non-legal), sending out mailings, and other less risky services? Or is this something we should all have no matter what? Forgive me if this is a dumb question!!

Not a dumb question at all. E&O Insurance also protects against things such as negligence, libel, slander, and breach of contract. Now while we are all most definitely upstanding VA's who would never even think of such a thing...we unfortunately live in a society in the U.S. that is sue happy. You'ld be surprised what people will want to sue others over. It's crazy!!!

I was wondering if everyone bought this coverage before they got their first client (when your business started) or after you got a few clients first?

I would call a few insurance companies and get their recommendations. One reason is because part of what they (the underwriters) may want to know is what your revenue will be, corporate structure, etc. - Some may advise that it can be covered under your general liability. I'm sorry - I know this is vague, but insurance companies have so many nuances that they need all of your particulars to help you make an informed decision. Naturally, even with your first client you may have some risk...but an agent should be able to help you weigh that risk.

For instance - if your first client was having you just get his or her files organized; little risk to them that you are going to cost them money by filing something wrong. However, if you are asked to book international travel and you send them to Japan instead of England...then that probably cost them a client as well as time & expense to get to their final destination.

I'm sure that helped about as much as grabbing a twig when your caught in quicksand...