5 Ways Technology Consultants Can Manage Their E&O Exposure
Many clients don't understand the nuances of the technology they use, and that knowledge gap is where Errors and Omissions risk blooms. If clients have unrealistic expectations, it can lead to frustration and lawsuits.
You can manage your client's high hopes and your own E&O risk through contracts, communication, dispute resolution, careful work, and E&O coverage. TechInsurance has provided IT professionals with insurance since 1997. Start an application to receive a free policy quote from top U.S. carriers, and continue reading for five tips to manage your E&O exposure.
E&O Risk Management Tip #1: Use Contracts with Everyone
The temptation to forego written contracts may be strong, especially when you are first starting a consulting business or working with people you know well. Your early clients are often acquaintances or friends, and the same is usually true for your subcontractors and part-time help. That familiarity can make contracts seem unnecessary.
Here's the problem with that: People tend to remember events in a way that best suits their needs and memories from two different parties might not always be aligned. Settling disputes can get downright unpleasant, and they could escalate into E&O lawsuits. A written contract keeps everyone on the same page and manages expectations. Make sure your contract details:
- The scope of the project.
- Each party's responsibilities.
- Important deadlines.
- Your fees.
Contracts are valuable in all of your business dealings. Use them with clients, employees, 1099 contractors, and subcontractors. While you're at it, you may want to require contractors to have their own technology Errors & Omissions Insurance so they can address their potential work mistakes.
E&O Risk Management Tip #2: Communicate Clearly and Frequently
When a client hires you to complete an important job, they probably expect some waiting period before they see results. If weeks pass and they get nothing but radio silence, they might start to wonder what's going on. Communicate with your client to help put their mind at ease. Check in often and be sure to:
- Send updates when projects change, even when they change for the worse.
- Send an email confirming any verbal exchange with the client so you have a record of how the project progressed.
Don't forget to amend your contract to reflect changes in the project's scope and make sure your client signs off.
E&O Risk Management Tip #3: Create a Complaint Resolution System
Unfortunately, a lot of tech consultants won't be ready when their clients complain. According to a recent survey, only 47 percent of TechInsurance customers have written client complaint policies in place. Creating a system for handling complaints doesn't have to be complicated. You can type up a single-page resolution policy that requires you to:
- Acknowledge and document the complaint.
- Investigate the complaint.
- Resolve the complaint.
- Communicate the resolution to the client.
- Follow up in a timely manner.
Documentation is key here. If a complaint turns into a lawsuit, you have a record of your attempts to resolve the problem.
E&O Risk Management Tip #4: Double Check Your Work
We know, this sounds obvious, but it's a step that's easy to overlook with fast-paced and dynamic projects. It pays to double check your work against your written contract to be sure you lived up to your end of the bargain.
E&O Risk Management Tip #5: Get Technology E&O Insurance
You can do everything right and still be named in a frivolous lawsuit. When that happens, Errors and Omissions Insurance can be a lifesaver. Coverage helps you handle legal disputes by helping you pay for:
- Attorney fees.
- Court-ordered judgments.
- Investigation costs.
Lawsuits, even the ones without merit, cost time and money, but E&O Insurance can minimize the financial burden. Protect your business and apply for coverage to receive free policy quotes from leading carriers.