Businesses try their best not to make mistakes, especially with the services offered. They make sure clients are happy so, they don’t get a chance to point fingers. But sometimes things get messy and no longer under your control. Well, mistakes are common and can happen to anyone. What’s more concerning is the consequences of your actions.

When businesses make mistakes related to professional services, they are at risk of getting sued by their clients. They can sue your business for omissions, errors, negligence, inaccurate advice, violation of fair dealing, etc. This is where errors and omissions insurance (E&O) coverage can be of help.

E&O insurance protects your company if you make mistakes with the services provided. It helps you to pay the costs if a client files a lawsuit against your business. To know more about this topic, we suggest you read our discussion below.

What Is Errors And Omissions Insurance?

Simply put, E&O insurance coverage protects your business from claims made by customers or clients for mistakes or errors in services provided. It also covers your failure to provide an expected service, faulty advice, or inability to meet a deadline.

Let’s say, you own an IT service firm that handles cybersecurity, computer networking, and software for other companies. You find out that one of your clients suffered a loss or security breach due to your negligence. In this case, your client can file a lawsuit against you and your firm. This is where E&O insurance covers the losses and protects your company from getting sued.

But before you sign up for E&O insurance, you must read the policies and terms and conditions involved. To Protect your interests  you may also check what it covers and if it’s the right choice for your company.

Who Needs Errors And Omissions Insurance?

As a business owner, you might wonder if you need E&O insurance. Well, this is completely fine as you will want to protect your company during unexpected situations.

E&O insurance is primarily meant for businesses that provide professional services or advice. For example: real estate agents, architects, accountants, IT consultants, and financial advisors. Even fitness instructors, wedding planners, and physical therapists can apply for an E&O insurance.

On the other hand, medical professionals, attorneys, and contractors are required by law to buy E&O insurance. Businesses that need to comply with their clients’ contracts, or renew their license should also buy E&O insurance.

Buying E&O insurance is a good idea as it helps protect your business against serious claims made by clients.

Things Errors and Omissions Insurance Don’t Cover

Before you decide to buy E&O insurance, it is essential to know about the things it doesn’t cover. This will help you make an informed decision.

  • Theft of important data
  • Data breaches
  • Criminal acts or fraud
  • Property damage
  • Bodily injury
  • Injuries to workers
  • Intellectual property violations
  • Infringement of patents
  • Discrimination and wrongful termination

Things That Errors And Omission Insurance Cover

Now let’s talk about the things that E&O insurance covers. This will help you understand the benefits.

  • Damages

This includes any settlement and judgment that results from the lawsuit.

  • Disciplinary proceedings

Any disciplinary proceedings ordered by a government, licensing, or regulatory body.

  • Court costs

This includes attorney fees, legal defence charges, and other court-oriented expenses.

  • Loss of earnings

The amount of money lost due to the time spent at trials and depositions.

  • Subpoena assistance

This is applicable only if you are a witness in a lawsuit.

How To Buy E&O Insurance?

If you decide to buy E&O insurance, you will want to know how to go about it. For this, you have to contact a company that offers E&O insurance and have a chat with them.

Fix an appointment and enquire everything you need to know about the insurance policy. Understand that every business is different and they face different risks. You should get E&O insurance only if it benefits your company.

Once you are sure, your company needs an E&O insurance, get a quotation to understand the costs involved. A good insurance company will help and guide you with the entire process so, you need not worry about anything.

E&O insurance coverage has a lot of importance for companies specialising in professional services. It protects them from bearing the costs of legal proceedings and other losses that may result from the client’s claims. However, you should proceed with the steps cautiously so, that you don’t make a wrong decision.