Understanding Errors and Omissions Insurance
Errors and omissions insurance (E&O) is liability coverage for people who offer professional services. They are at high risk for dealing with lawsuits accusing them of inadequate or negligent work.
Who is Most in Need of Coverage?
Lawyers and accountants commonly obtain this type of insurance coverage. They’re in the business of providing legal and financial advice to their clients. One mistake, even if it’s unintentional, might cause a client to feel upset or wronged. And this can potentially lead to a lawsuit.
In addition to lawyers and accountants, several other professionals often use this coverage. Web hosting companies and advertising agencies are sometimes accused of errors when clients don’t get the results they expect. Failing to complete a job on time can also lead to problems.
If the client decides to sue, it’s possible the professional will be found liable for damages. Could your business handle the expense? If not, how would you pay the damages? With an E&O policy, your insurer will help pay your expenses. That is, as long as you’re not accused of any criminal activity.
Professionals at high risk for facing lawsuits should consider errors and omissions insurance. It’s an additional monthly expense. But think about how much you could possibly pay out of pocket without insurance coverage. You’ll probably discover that the risk of not having coverage is too great.