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Who needs Errors and Omissions Insurance?

Posted in Commercial Insurance Tips

Who needs Errors and Omissions Insurance?

What is Errors and Omissions Insurance?

Errors and Omissions (commonly referred to as E&O), is a form of liability insurance that helps protect you from client lawsuits that claim you made a mistake in your professional services. Errors and Omissions cover is also called: professional liability, malpractice insurance or even media liability. E&O covers all costs which you become legally obligated to pay as damages, because of injury arising out of the rendering of, or failure to render, professional services in the practice of your profession.

Who needs Errors and Omissions Insurance?

If your business offers a professional service or provides advice to a client, this insurance coverage is for you. It’s the only business insurance that protects against dissatisfied clients who file a lawsuit over (for example) a mistake, accusations of negligence, a missed deadline, or a complaint related to the work preformed versus the signed contract.

E&O policies are designed to specifically cover professionals who give advice, counselling or administer health care. Physicians, dentists, pharmacists, engineers, architects, lawyers, accountants and insurance brokers are in this category.  Barbers, hair stylists, beauticians, morticians, veterinarians, optical establishments and hearing aid establishments also require special types of professional liability insurance.

Your Errors and Omissions policy would help cover the cost of admin expenses, court judgements, settlement costs and court fees, should you be involved in a lawsuit over the quality of your work. The legal "causes of action" for an E&O lawsuit can vary from negligence (an accusation that your work was careless or didn't meet industry standards) to breach of contract (you didn't follow through on the promises you made in your contract with the plaintiff) (source: Insureon).

How can you help reduce your E&O exposure?

No matter how hard you try to avoid an E&O claim, they will still likely arise. To help reduce your exposure and be able to prove adequate due-diligence in court, we recommend a few simple risk management actions including documenting all interactions with your client, always signing a contract and be clear on all expectations of both yourself, and the client.

Does your business have the right E&O policy for your risk?

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