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 Every Professional Business Insurance Portfolio Needs an Error and Omissions Policy

Every Professional Business Insurance Portfolio Needs an Error and Omissions Policy

Most businesses carry general liability insurance. However, healthcare professionals along with professionals (e.g., architects, attorneys, accountants, etc.) need an additional layer of insurance, known as Errors and Omissions Insurance.

How E&O Insurance Protects You

In the event that a patient or client feels that you or your company is responsible for an act that has harmed them or caused them financial damage; that act is an error. If the client or patient feels that you or your company failed to perform a service, and that failure has resulted in harm or financial loss, that is an omission. E&O insurance covers you or your company for court ordered judgments, out-of-court settlements and legal defense costs. Errors and omissions insurance for healthcare professionals is frequently called malpractice insurance.

Even if the allegations against you or your company are without merit, defense costs can run into the tens of thousands of dollars— these can bankrupt solo professional practitioners and small or medium-sized businesses. Even large businesses can sustain a long term negative impact on their profitability.

The importance of E&O insurance is that in the event that you or your company has been alleged to have committed an error or omission that caused damage to a client or patient, you will be protected along with the company for the cost of legal defense and monetary compensation.

Who Needs E&O Insurance?

The most well-known professionals who need E&O insurance are people such as physicians, accountants and attorneys. But, many other service providers also need this kind of coverage. People and companies that provide advertising services, printing services, Web hosting companies and event planners are all examples of companies that provide services to their clients and customers. In the event that the service provided by you or your company is thought to be provided poorly or part of the service was not provided at all, a lawsuit is clearly possible.

Why Companies Need E&O Coverage

In a nutshell everyone at some point makes a mistake. Companies that carefully select only the best people to work for them and have policies and procedures in place to prevent errors from happening must still protect themselves from human error. Imagine an event planner who is contracted to obtain a venue, food service and speakers for an important corporate event. Somehow our imaginary event planner books everything on the wrong day. Two things have occurred here, the first is that someone is responsible to pay all the expenses incurred by booking on the wrong day and someone may be responsible for making the client company whole as they scramble to have the event go forward as planned. Despite everyone’s best efforts mistakes will happen.

Since losses such as these are not covered under a general liability policy, service companies that do not have E&O insurance coverage are likely exposing themselves to a potentially disastrous financial risk. Make sure you and your company have the coverage that you need. Call Insurance by Design today at 866-840-8004 for a no obligation review of your Errors & Omissions insurance needs and a free quote from an independent insurance agent who works for you, not for a particular insurance company.

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