|Errors & Ommissions Insurance|
Errors & Omissions insurance, otherwise known as E&O, professional liability, or malpractice insurance, is essential protection for physicians, lawyers, architects and many other "professional" and their professional practices. E&O is also critically important for companies that are not professional practices per se, but that provide professional services to others
Why do you need errors and omissions insurance?If you have a professional services business, having errors and omissions insurance coverage can be an integral part of protecting your business. Accusations of negligence or the failure to perform your professional services are things that any professional services business can be sued for, even if it hasn't made a mistake.
You should seriously consider errors and omissions coverage if your business:
What is covered?
What is not covered?
Who needs E&O insurance?The best-known professionals who need E&O insurance are doctors, lawyers, accountants, architects, engineers, etc.
However, less thought about individuals range from advertising agencies to commercial printers, Web hosting companies to wedding planners. If you are in the business of providing a service to your client for a fee, you have an E&O exposure. You may want to consider what will happen if the service is not done correctly or on time, and it costs your client money or harms their reputation.
Here are some steps you can take to mitigate claims:
What type should I buy?Errors and omissions insurance policies vary from company to company, and are written to reflect inherent risks and common exposures particular to different types of businesses.
Some events resulting in a loss for a client may have occurred several years in the past, and the first time the mistake is apparent is when a court summons arrives in the mail. That's when the retroactive date on the policy is very important. The farther back the retroactive date of the policy, the more coverage and protection it offers.
Even if claims are found to be unwarranted, legal fees and other related expenses can quickly eat up a company's cash reserves in no time, causing a financial hardship. Most errors and omissions insurance policies cover judgments, attorney fees, court costs and settlements up to the limits of the policy.
Are All E&O Policies The Same?Each Errors & Omissions policy differs based on the company's needs, priorities, and risk profile. For example...
Different policies may or may not cover certain risks, such as cyber liability, intellectual property claims, or regulatory infractions.
Why Your Business Needs E&O CoverageBeyond making sure that a services-based lawsuit doesn't bankrupt you, you'll want to have E&O Insurance to give your business a competitive edge. In fact, depending on your industry, E and O coverage may be required by contracts you land, clients you hope to woo, or regulatory bodies overseeing your industry.
Client Trust Means Client SatisfactionIn that very tangible way, E&O coverage can act as a financial safety net when something goes awry with your work. But there's also the fact that your policy can help distinguish your business from the competition by building credibility. E&O demonstrates to clients that you have their long-term interests at heart and that you take your work seriously.
Who is a professional?A professional is someone who possesses special knowledge and skill necessary to render a professional service, and who is subject to the legal, ethical and/or technical requirements of a given profession. The best-known 'traditional' professionals, such as doctors, lawyers, architects, engineers, accountants and others, clearly have special knowledge and training to perform their professional services. In order to practice, these professionals are required to earn specialized degrees and comply with relevant regulations, and they are held to a certain standard of care related to their professions. There is a large and growing body of case law that shapes the acceptable standard of care for these professionals. Professionals are usually licensed and/or certified, and generally receive continuing education throughout their career.
Errors Resulting in E&O ClaimsLAWYERS
What Does E&O Not Cover?The exclusions employed in E&O policies vary, based on the class for which the policy has been written. Here are a few exclusions common to many policies:
In SummaryErrors and Omissions insurance is professional liability coverage for claims relating to either providing a professional service or failing to provide a professional service. No matter what profession you're in, an error or omission... even a simple mistake which causes financial harm to another, can put you at risk. This type of policy can help protect you or your company from bearing the full cost of defense and damages for lawsuits that may occur. This is a separate coverage from your standard general liability or property insurance.
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