Mistakes can happen, but when a professional makes an error, forgets to do something, or provides bad advice, they could get sued for their negligence. That’s why all service-related individuals should have errors and omissions insurance to protect them in case of accidental errors or alleged negligence.
What is Errors and Omissions Insurance?
Errors and Omissions insurance, or E&O for short, is professional liability insurance that is designed to protect professionals from any claims alleging financial loss due to a service they provided. This could include lawsuits that allege negligence, errors, omissions, libel, defamation, misconduct or failure to deliver upon promised services.
Who Needs Errors and Omissions Insurance?
Any professional who provides advice to their clients. This could include consulting services, real estate agents, financial advisors, accountants, engineers, architects, psychologists, lawyers, media services, and other service-related individuals.
What Does It Cover?
E&O insurance will cover any legal costs and damages related to a claim. This can include lawyer fees, administrative fees, court filing fees, and settlement costs, to name a few. This type of insurance will not cover improper employment practices that result in a claim or any illegal or fraudulent activities. It’s also important to note that E&O insurance does not offer protection for property damage, employee lawsuits or injuries.
How Much Coverage Do I Need?
The amount of coverage you will need depends on the size of your company, gross revenues, the type of services you offer, and a number of other factors. Considering the typical negligence lawsuit can cost a business approximately $100,000 before legal fees, it’s important to carry enough insurance to protect your company from financial hardship. Because of the impact that a claim can have on a business, it is recommended that smaller-sized companies carry at least one million dollars of coverage and larger agencies carry at least five million dollars.
Is It Mandatory?
In some industries yes, E&O insurance is required by law. For example, mortgage agents are required to hold E&O insurance in order to practice. Many other high-risk industries also require insurance in order to operate.
How Do You Get It?
Companies will apply for a policy that protects the business and employees from any mistakes that are made on the job. Individuals and contractors can also obtain their own policies.
Contact one of our insurance brokers at Rowat Insurance today to learn more.