Listen to: "How to Reduce Your E&O Insurance Premium with a SOC Audit"
How Can a SOC Audit Help You Save Money on E&O Insurance?
A SOC audit is one of the best ways you can save money on premiums for errors and omissions (E&O) insurance to cover your digital operations. Just like an auto insurance company wants proof that you are a good car insurance risk—free of numerous previous accidents and citations—before considering offering you a healthy discount, an E&O insurance company needs similar proof that you are carefully tending to the protection of your computing system.
Demonstrating that you have sound controls over your computing environment will certainly put you in contention for better E&O rates. Everything from the board of directors’ participation in the shepherding of the data to daily management oversight and beyond are factors that matter to E&O insurance companies.
How can you cover all of these criteria and more to reduce the cost of E&O insurance? A SOC audit covers your internal control environment. When you have your SOC audit performed and submitted by an experienced auditor, you can send the glowing report to your E&O insurance carrier to help reduce the costs.
No One Can Afford to Gamble with Skipping E&O Insurance
It is probably safe to imagine that every business owner—from the latest small business owner to the CEO of a massive corporation—would love to skip on buying E&O insurance.
The National Association of Realtors (NAR) is quick to throw a wet blanket over the idea shirking this particular responsibility—regardless of how prohibitively expensive it may seem—is a bad idea. The NAR goes on to state that E&O insurance is a necessity for business owners, regardless of whether it’s required in the business’s state.
Even if you are diligent and committed to always providing the highest quality of services, mistakes can happen. A client may hold a different perspective and decide that you are at fault if they have a problem with your work or the end result.
A single lawsuit, stemming from such a difference in perspective, could devastate your business if you have not purchased the appropriate E&O insurance policy. Even at the minimum cost of defending yourself against a claim without E&O insurance, you might find your business in danger once everything is resolved.
No matter what the upfront cost, E&O insurance is worth the peace of mind so you can run your business with confidence and a sense of security that, even if you are slapped with a lawsuit over a data breach, you can cover your defense and other expenses.
All of that noted, there are ways to trim your costs while staying fully covered, which include shopping around for the best quote, finding a savvy insurance agent who specializes in E&O policies, and by creating the safest possible computing environment for your organization by performing a SOC audit.
What Types of Business Does E&O Insurance Cover?
While E&O insurance is commonly associated with the mortgage industry, this professional liability insurance is available to a wide variety of industries, including the following:
- Real Estate
- Software Development
All companies need a certain degree of coverage to protect themselves while performing standard business duties. Actionable incidents can happen in any business setting, and small business owners should take note that it is never too soon to purchase this crucial insurance.
In order to fit to each profession, industry and field, E&O insurance is customized accordingly to protect companies and their employees from any damages related to a variety of possible incidents.
What Are Common General Claims That Companies Face?
Misrepresentation and failure to disclose are among the most common claims mortgage firms face, but there is much more that these companies must consider when doing business. Following are some of the general claims that businesses typically face:
- Alleged or actual negligence
- Defense and court costs, including attorney fees, court costs, administrative expenses, settlements and judgments
- Personal injury (e.g., libel or slander)
- Copyright infringement
- Worldwide E&O insurance coverage
- Temporary staff and independent contractors
- Claims arising from services provided in the past
- Claims and damages
- Bodily injury or property damage
- Fraudulent acts
- Employment matters
- Patents and trade secrets
- Personally identifiable information (PII)
Should Technology Issues Such as Data Compromise and the Vulnerability of Personally Identifiable Information Hold Higher Spots on the List of Claims?
Of all the claims listed, you may not keep the compromise of data—allowing for the exposure of a client’s personally identifiable information—high enough on the list. You may find your perspective changes, as nary a day goes by recently that there isn’t some type of data breach announcement. Every business is susceptible to a data breach. The question is whether your business can bounce back without an E&O insurance policy.
Taking a glance at companies that have suffered data breaches over the past years, like Target and Home Depot, it is clear that they have bounced back into the hearts, minds and pocketbooks of customers. But at what cost?
Data breaches often cause a wide range of costs and fines for a company to cover, in addition to the full-scale public relations and legal campaigns that they have to instantly launch for damage control and defense, including:
- Additional security measures that include pen testers, consultants and security vendors
- Fines set forth by data protection authorities for any non-compliance that may or may not have contributed to the breach
Now more than ever before, it is critical that you protect your data against relentless infiltrators and issues of non-compliance in your own business through crucial tools like SOC audits.
How Can You Achieve the Best SOC Audit Report to Earn the Best Possible E&O Savings for Your Business?
At I.S. Partners, LLC., we can work with you to create the best control environment possible on a daily basis to ensure that our work as your SOC auditor always reflects a diligent and committed business owner. With our SOC report, your E&O insurance carrier is sure to offer you the lowest rates possible.