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Errors and omissions insurance is a type of specialized insurance that can protect you and your business in the event of a lawsuit. It's critical coverage to have if a customer sues you for negligent acts committed during businesses activity that caused them financial losses. Some states require this coverage before a business is even eligible to open, but whether or not it is required, it can protect you if a customer ever sues you for an error or a perceived act of negligence.
What is Errors and Omissions Insurance?
If you or your business is responsible for providing a service to a client for a fee, you are at risk of potentially being sued if the client believes that you didn’t deliver the service as promised or that you made an error that caused financial strife for them. Whether or not the client is successful in proving an error or omission, it is essential to have this coverage because legal costs can be extremely high. This coverage can protect you from defense costs and judgments as well as damages or settlements.
The most well-known types of errors and omissions insurance are malpractice insurance and liability insurance. Medical professionals such as doctors, surgeons and chiropractors choose malpractice insurance coverage. On the other hand, business professionals such as accountants, lawyers, architects, and engineers would opt for professional liability insurance.
Who Needs Errors and Omissions Insurance?
A wide range of businesses and professional individuals need errors and omissions insurance coverage. It's commonly known that doctors need malpractice insurance coverage, but other types of companies are also at risk of legal action in the event of an error or perceived negligence.
When the services that you or your company offers has the potential to cause financial losses to others, your company needs errors and omissions insurance coverage. Examples of business errors that might result in a lawsuit include:
- Printing companies might print the wrong information or neglect to deliver important printed documents on time
- Advertising agencies might make an error in their advertisements that had a negative impact on the client
- Wedding planners who make a mistake on the date or the location
- Personal trainers may give guidance that results in injury
- Transportation companies may not meet deadlines
Just about any business that provides a service to a client that could result in harm or profit loss if anything goes wrong should consider errors and omissions insurance.
The Risk of Not Having Errors and Omissions Insurance
Everyone makes mistakes, and not purchasing this coverage is a serious financial risk. While you might believe that you are good at what you do and that you rarely ever make mistakes, you should keep in mind that you don't necessarily have to make an error to be sued. A disgruntled client can sue you if they perceive an error or omission even if nothing had been carried out incorrectly, and the cost of defending yourself can be significant.
Consider the possible errors made by your employees, particularly those who are inexperienced. Your policy can be written to cover you and your business, including employees, independent contractors, and temporary help.
Obtaining Errors and Omissions Insurance
A single lawsuit can destroy your company financially. With the stakes for success being as high as they are, it's essential to have an errors and omissions policy tailored to the requirements of your company. The costs associated with your policy will depend on a variety of factors including the size of your company, the number of employees, and your annual revenue along with the amount of coverage you need and the size of the deductible.
Contact one of our independent agents to see what kinds of error and omissions coverage you may need for your practice.