Errors Omissions Insurance (Professional Liability)
If you`ve got a general business liability policy, you may think you have all the bases covered in terms of protecting your business against lawsuits. But liability insurance only protects against physical acts, such as a customer being injured in a store or from a faulty product you sold. If you provide a professional service, you could be at risk of being sued if you make a mistake that negatively affects a client. For this reason, you should carry errors and omissions insurance.
What is it?
Errors and omissions insurance, commonly referred to as E&O insurance, is a type of malpractice insurance. It generally protects professionals, such as lawyers, doctors or financial advisers, in the event a mistake they make leads to financial loss, physical harm or loss of reputation for a client.
Who should have it?
Any professional who provides services to businesses and individuals should carry errors and omissions insurance (e&o insurance). Doctors and some other medical professionals are usually required to carry malpractice insurance. Some Canadian provinces, including Ontario, Quebec and Saskatchewan, require estate planners and financial consultants to carry errors and omissions insurance.
For most other professionals, errors and omissions insurance (e&o insurance) is optional, at least from a legal standpoint. However, though it may not be required by law, it`s still a good idea to carry it.
Most professionals wouldn`t intentionally do something wrong or give a client bad advice, but everybody makes mistakes. For example, say you`re an attorney and you miss a filing deadline that causes your client`s case to get dismissed. Maybe you are a surveyor who makes a mistake and causes a builder to construct a building partially on someone else`s lot. In either of these cases, errors and omissions insurance would cover you in the event the client sues and wins a judgment against you.
Even if you are falsely accused of making a mistake, your policy will cover your legal expenses.
How do you get it?
Most companies that sell general business liability policies also offer errors and omissions insurance (e&o insurance). You might also be able to find agents who specialize in selling such insurance, especially if you live in a large city.
Even if you get a policy from the same company that does your liability insurance, you may still have to go through a separate underwriting process. The underwriter will likely want to see copies of contracts as well as any quality control or training policies you have. They also will want to see your claims history or lack thereof.
Rates for errors and omissions insurance(e&o insurance) will probably depend not only on your own situation, but also on the industry in which you work. For example, if you work in an industry where mistakes are common and often lead to lawsuits, your premiums will likely be high, even if you haven`t been the target of a lawsuit.
If you go without errors and omissions insurance (E&O insurance), you could wind up in financial straits if you make a mistake and lose a lawsuit over it. In that case you may find yourself needing to find a way to get debt relief or debt settlement, which you can do at go here.