Now, everyone makes mistakes. Even the best of your employees might. But, some of these mistakes can lead to expensive lawsuits, which can severely damage organization’s financial stability and market reputation. Errors & Omissions (E&O) insurance helps protect your businesses against such losses.
E&O coverage, also known as professional liability insurance, protects employees and employers against client’s claims of negligent acts or failure to provide the expected level of advice or service. E&O policies usually cover legal costs associated with the claim and the ensuing settlement, up to the limit specified in the insurance contract. Keep in mind that this insurance doesn’t cover malicious or intentional acts.
But do you really need E&O insurance for your business? Short answer – yes.
An Effective Risk Management Instrument
E&O insurance is essential for virtually any business that provides a professional advice or service. A possibility of lawsuit because of negligent or incomplete service or an incompetent advise cannot be ruled out, whether the associated claims are legitimate or not. And in case of a legal suit, there is a range of costs that you might have to bear: court costs, lawyer's fees, administrative costs, expert consulting fees and of course, the eventual cost of a settlement if found responsible. These costs could be devastating for your business. E&O Insurance covers these costs, so that you can weather the storm. Bottom line: If you are providing a service, you should have E&O insurance.
A Growth Management Tool
No matter how diligently you monitor your employee’s performance or vet your customers, you or your employees may still be accused of a mistake. And as your business grows, your ability to control the quality of your service may be even more severely challenged. You need insurance to protect yourself against legal risks so that you can focus on business growth. E&O insurance thus helps you to avoid any setbacks to your growth plan by providing you the right protection.
A Legal Requirement
While not all types of businesses are legally required to carry E&O coverage, some professionals and businesses are required by regulatory or licensing boards within their industry to have it. For example, medical professionals, i.e. doctors, nurses, therapists etc., are required to carry medical malpractice Insurance in most states. Similarly, in many states, real estate agents are required to show proof of E&O coverage before they receive their licenses.
A Contractual Requirement
Large contracts, especially government contracts, might require businesses to carry E&O Insurance to cover potential mistakes. This is a commonly followed risk management practice. So, if you are bidding for one of these contracts, you will have to commit yourself to purchasing an E&O insurance policy.
E&O insurance is an absolute must for business owners. You’ll thank yourself in the event of a lawsuit that you might have never expected. Contact us to assess your risk exposure and learn how you can protect yourself against expensive legal claims. You can call us on 800-903-8690 or 972-293-2139 or contact us online here.