Five Steps To Sound Business Decisions (Using Error And Omissions Insurance)

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Five Steps To Sound Business Decisions (Using Error And Omissions Insurance)

Running a business is hard and requires making hundreds of decisions; having a decision making system in place makes this easier. Using a concrete and objective way to evaluate the different choices and forecasting possible effects increases the chances of successful resolutions. These sound business decisions can be made with same analytical thought process and five steps used to decide if the investment in error and omissions insurance is warranted.

The problem is analyzed with all current information gathered. In the case of error and omissions insurance, this insurance is an added expense to the business. However, e & o insurance covers unintentional errors or mistakes made protecting the owner and business; this coverage is not available in the business liability policy. The business operates conscientiously and pays close attention to details doing everything possible to eliminate or resolve customer complaints or problems. Can the cost of this insurance be justified?

Considering options is thinking about what if. The "what ifs" depend on the business as each business has its own set of risks. A transportation company misdirects a 58-foot van trailer filled with perishable food across the country from its destination and the load is spoiled. A wedding planner books an expensive resort for the wrong month and the wedding cannot take place as ordered. A construction company misplaces a change order to add another bathroom per floor on a 10 story high rise. Can the business survive correcting these problems or pay the lawsuits that will be filed without an error and omissions insurance policy?

Reviewing the cost, risk and benefit of each decision takes just a few minutes of time. The business can insure itself and be responsible for what happens in the future, becoming self-insured. Investing in the cost of the insurance premium transfers the risk of potential losses to the insurance company. Error and omissions insurance also covers attorney fees. Once the insurance company is contracted over a lawsuit or a potential lawsuit, the company will provide an attorney experienced in that industry to assist the client in defending against the suit or negotiating a settlement.

Many times choosing the best course of action is clear after these three steps have been reviewed. Step 4 is making the decision and step five is reviewing the process for better options in the future. With the case of error and omissions insurance, the business decided to purchase an insurance policy. The next step is to develop safeguards in business activity reducing the chance of making an error.

Once these five steps to making sound business decisions are implemented, decisions are easier to reach. Whether the assessment is to include an error and omissions insurance policy, add new equipment or reduce workforce, the procedure is the same. This system analyzes the problem, considers options, costs and benefits, chooses the best probability and looks for ways to improve future choices.

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