The Importance of Having the Right Types of Insurance
Time and time again, I run into so many freelance bookkeepers who do not invest in an insurance policy. I have to stress to you how important it is to make this investment.
Most of us start our business because of the passion we have for what we do. Unfortunately, owning a business also comes with a lot of accountability and responsibility. Although we strive to service our clients to the best of our capabilities, a client’s perception of our quality of service may be entirely different. If for any reason they wind up thinking you did them wrong, it can open you up to a can of worms if you are not protected.
For instance, did you know that if you take a client to court for non-payment of a bill, let’s say over the small claims threshold of $5,000 so it ends up in civil court, the client can counter sue you if they feel there are errors in your work? Did you know that depending upon the errors and omissions insurance you purchased, the policy will cover your legal fees?
Better yet, did you know that your general liability insurance can protect you against employee dishonesty and forgery? Your regular policy covers a small portion of this, but you can always have an additional policy added with higher thresholds included. I discovered this little tidbit of information when I was researching whether or not I needed to be bonded. At the time we had run into an issue with a local payroll company who failed to make the tax payments for their clients and all the clients were held liable for their tax payments. Turns out the bond did not cover the client at all.
Here are insurances you should have:
- General Liability policy: Protects the assets of the business. It can protect you for property replacement, theft, medical expenses, employment practices, employee dishonesty, forgery, personal property, papers and records.
- Professional Liability Policy: Covers you against errors, omissions and negligence. It protects your company from claims if your client holds you responsible for errors or failure to complete the work performed as promised in your contract.
- Worker’s Compensation: Covers any injuries that may happen to an employee while they are working, whether it be off premise, in the car or even a work related illness.
Invest in yourself and protect yourself from the unexpected. Take my word for it – you do not want to learn these lessons the hard way.
