Nothing is certain in today’s world. Anything can happen at a moment’s notice. This can be especially true in the business landscape. All it takes is one claim of negligence to take down a company. Proper insurance coverage can help companies stave off destruction due to costly claims and related expenses. Companies across every industry can shield themselves with many types of business insurance that include general liability, commercial property, and commercial auto. Errors and omissions insurance can complement these and other types of coverage.
Errors and omissions insurance can come in handy if your company is accused of making a mistake, committing professional negligence, or not fulfilling its end of a business agreement. Purchasing this type of insurance is crucial to offset any costs that would normally have to come from your company's coffers. Getting an errors and omissions insurance quote is the vital first step toward protecting your company's fiscal stability.
Errors and omissions insurance, also called E&O insurance and professional liability insurance, can help protect companies from claims if a client sues for negligent acts, errors, or omissions that occurred during business activities that result in a financial loss.
This example can demonstrate how errors and omissions insurance works:
An insurance agent forgot to inform a policyholder to renew an auto policy. The policyholder gets into an auto incident after the policy's expiration date. The policyholder could be responsible for their repair and medical bills. The policyholder could sue the agent because they did not notify the policyholder of the expiration. The agent's omission contributed to the policyholder's financial loss. Errors and omissions insurance can help cover the agent for their mistake, paying any legal costs and damages.
Errors and omissions insurance is no different from professional liability insurance. Both types of insurance provide the same coverage. Confusion between the two stems from different industries using both terms to mean the same thing. For example, the real estate industry often uses the former term while the engineering industry uses the latter.
To further muddy the waters of business insurance terminology are the similarities and differences between professional liability insurance and general liability insurance. Depending on your company's industry, you might need both types of insurance.
Professional liability insurance can protect your company against claims of negligence that do not involve physical injury or damage. These abstract risks include copyright infringement, breach of contract, and other examples found in this article.
General liability insurance can protect your company against claims of physical injury or damage to property caused by your company's products and/or services.
A claim of professional negligence against your company can take time and money until it is resolved. Errors and omissions insurance can help cover these expenses so your company can continue operations uninterrupted. Plus, this type of coverage can help your company avoid having to pay for anything out-of-pocket.
Having errors and omissions insurance can help your company grow its client base. Prospective clients can discover your coverage and realize that they are protected should your company make a mistake that financially harms them. This reassurance can persuade more people to do business with you.
Your company might be required to have errors and omissions insurance before it enters a contractual arrangement with other companies or clients. The people you do business with want to make sure they are protected from financial losses just as much as you. Errors and omissions insurance can help ease their worries.
Accidental oversights happen. We are all human. Despite your company's best efforts to provide the best service, your employees can still commit an error. Plus, they can always be accused of making one that allegedly caused financial harm. Errors and omissions insurance can protect your company against these instances.
Although many companies aim to perform to professional standards, some do not or can not. These companies could act against the best interests of their clients and cause great financial harm. Errors and omissions insurance can help companies maintain their finances and reputations should they not fail at their duty of care.
As previously mentioned, errors and omissions insurance (professional liability insurance) covers non-physical risks. As such it will not cover non-employee injuries or property damage. You would need a general liability insurance policy to cover those areas.
Errors and omissions insurance is a world apart from the type of coverage you would need to take care of your employees should they become injured or sick while working for you. Workers' compensation insurance would cover their medical expenses, lost wages, and more should they fall ill during regular business operations.
If your company requires the use of vehicles, then you should obtain commercial auto insurance. Errors and omissions insurance will not cover your company if its employees are held liable if they cause injuries or damage while operating a company vehicle.
Errors and omissions insurance policies will not cover your company's property. Commercial property insurance can help you repair or replace any equipment your company uses.
Errors and omissions insurance covers professional mistakes made by your company against other people. It does not cover internal disputes like discrimination or wrongful termination claims.
Errors and omissions insurance can cover many of your company's professional mistakes. However, this type of insurance will not cover any decisions that purposely cause financial damages. This includes false advertising. You can not use an errors and omissions policy to cover you if you are sued for promoting false information about your company.
Any company that offers services or advice to clients should purchase errors and omissions insurance. A few business types that could benefit greatly from this type of insurance include:
Your insurance premium depends on several factors, including:
If your business involves more risk, like investment advising, then your errors and omissions insurance rates could be higher than if your business involved digital marketing or another low-risk industry.
If your company has a history filled with errors and omissions claims, then you can expect to pay more for coverage because it is likely your company will face more claims in the future.
The number of your company's employees equals the number of risks you should cover. More employees mean more risks. If your company employs a lot of people, then you can expect to pay more for insurance.
Anyone can sue you for professional negligence even if the claim is not true. A prosperous company can be an appealing target for people looking for a quick and easy score. If your company is likely to be sued, then your insurance rates could be higher than usual.
If your company is in a state with high minimum coverage requirements, then you will have to pay more to maintain coverage.
If your errors and omissions insurance policy has a high limit, then it will probably cost more than one with a lower limit.
In minutes, you can get errors and omissions insurance quotes from many insurance providers. Just visit their websites or call them to discuss what type of coverage you need. If you choose the online option of getting a quote, you can purchase coverage from the same website.
You will probably be asked to supply the following information to get an errors and omissions insurance quote:
Every company carries liabilities. Business insurance can protect against the harm those liabilities can create. Errors and omissions insurance can help cover expenses if you are accused of making a mistake, missing a deadline, or causing a financial loss while providing business services. Getting an errors and omissions quote and buying a policy can protect your company from alleged and true claims of professional negligence.
Errors and omissions insurance typically covers any person your company hires to provide professional services for your company. However, you should refer to your policy as details may vary. You can also contact an insurance agent or broker to verify whether or not errors and omissions insurance will cover all of your subcontractors or employees.
You might be legally required to have errors and omissions insurance depending on your company's location and industry. Contact an insurance professional to determine if you must obtain this type of insurance. An agent or broker can also give you a quote and help you purchase a policy.
Many insurance providers will let you add errors and omissions coverage to your existing general liability policy. You should get in touch with your insurance issuer and talk to them about your coverage needs.
The purpose of errors and omissions insurance is to cover expenses caused by professional mistakes. Errors and omissions insurance will cover you if you are accused of professional negligence and are at fault. However, it will not cover you if you intentionally caused the mistake or performed a criminal act.
Many insurance providers will allow you to add an additional insured to your errors and omissions policy. Talk to your insurance provider and they can tell you for sure and assist you with what you need.
There is no objective way to determine what is the best errors and omissions insurance option. However, the best option is one that works best for your company's needs and budget. Once you assess those two items, then you can shop for a policy that fulfills your requirements.