What Is Errors &
Omissions Insurance?
Errors and Omission is a form of Business Insurance that is designed to protect a business against liability claims by their clients, professions, or companies that are hired to do a certain type of job or to give advice related to your expertise such as lawyers, insurance agents, and law firms. These types of jobs can be subject to liability claims due to inevitable mistakes.
What do Errors and Omissions Insurance cover?
Errors and Omissions protect the policyholder against financial ruin due to liability claims. It generally covers settlements and judgments, court costs, and other legal expenses unless excluded from the coverage. For instance, someone sued the business owner for giving the wrong advice. This type of commercial insurance could help cover the insured from specific fees, such as below:
Errors and Omissions are also known as Professional Liability insurance, which could protect the insured professional against lawsuits. Claims for Errors and Omissions are sometimes baseless accusations. However, if a client files a legal action against the insured, you will not have a choice but to seek advice from lawyers. In that case, the attorney has to be compensated with the legal services the attorney performed. With this insurance on hand, you will be able to lessen your expenses since this could help the insured from attorney fees.
There could be two possible results once a third party person files litigation against the insured professional. First, when the claimant dismisses or drops the lawsuit, the insured would only need to pay for attorney fees. However, if the claimant continued the case and were settled out in the court, the insured would need to pay a significant settlement to the claimant. Also, if the jury of judges made a judgment on the case, the insured will need to pay for it. With Errors and Omissions in hand, you will be able to pay for this cost without using your out of the pocket money.
As we all know, litigation could be so expensive that it could sometimes take your hard-earned business away. These court costs include the fees for reserving a courtroom and the payments for witnesses. In addition to that, there is also a fee for copying, filing, and postage of documents.
Entities that are Covered by Errors and Omissions Insurance
Errors and Omissions provide coverage to your business, employees, as well as subcontractors. As the company owner, your business, and your employees would become legally liable once a mistake with its professional services occurs.
Moreover, it could also provide protection for the subcontractor that the insured hired to perform specific jobs. However, you must first add this specific coverage to your policy. Also, be reminded that this coverage has specific limits. Contact our licensed agents to get more information about E&O coverage.
Exclusions on Errors and Omissions Insurance
Errors and Omissions Insurance policy covers liability claims; however, some liability claims are not covered in the policy.
Bodily injury and property damage claims are not covered under Errors and Omissions. E&O Insurance protects the policyholder from claims due to poor work performance or negligence that puts the client in a bad situation. To cover risks from bodily injury and property damage claims, General Liability Insurance is the right coverage to protect your business. Get a General Liability Quote for small business now.
Errors and Omissions insurance typically does not cover this type of damages or loss. If an employee sues your business for discrimination, harassment, or wrongful termination, Employment Practices Liability Insurance (EPLI) is the right coverage to protect you and your business. Employment Practices Liability Insurance covers the legal fees and the cost of a settlement or judgment. Get a free Employment Practices Liability Insurance Quote for your business.
An employee who incurs injuries while performing his job is not covered under E&O insurance. Therefore, you must purchase a separate policy for better protection, which is Workers' Compensation insurance. This type of insurance is a type of Employer’s Liability Insurance designed to cover the employees against work-related injuries. Moreover, it could also compensate the insured’s family when the employee dies while performing his work. Get a Workers Comp Quote Now.
Errors and Omissions insurance does not cover the claim if it is over a data breach. You must need to purchase Cyber Liability Insurance for better protection, especially if your business’s main operation is technology integration. Get a free Cyber Liability Insurance quote here to protect your business against unwanted losses.
Errors and Omissions Insurance does not cover businesses that typically use vehicles to perform business operations. With this type of business, you must purchase Commercial Auto Insurance. In California and other specific states, it is mandated by the state law to have this type of insurance.
Get a free Commercial Auto Quote now.
How much E&O insurance do you need?
Errors and Omissions insurance rates are typically determined based on the types of jobs and clients you serve. However, there are a variety of factors that your rate can be based such as,
- Business Size
- Industry
- Contracts
- Location
- Coverage Limits
- Claim history
- Annual Revenue
- Number of Employees
E&O does not cover claims if you are involved in illegal activity and intentional acts of negligence.
Why Having an Errors and Omissions Insurance is Important?
Business partners or clients may demand E&O insurance before conducting business with you or to your company. This form of Commercial Insurance is an assurance that the business they are dealing with is properly insured. Moreover, it could provide the other entity security if the insured commits negligence on work that may cause financial loss to the other party’s business. To sum up, Errors and Omissions is beneficial as it protects your business at a certain risk.
E&O may sound costly depends on how large your business is. However, if you are paying $1,500 annually for your premium rate, it protects your business against claims that can cost thousands of dollars. It’s a wise decision to purchase the E&O policy knowing your business is protected before a claim occurs.
Are you a new business owner or a long time business owner that is seeking comprehensive insurance? Our affiliated and experienced agents will help you get the right coverage and the most affordable rate from trusted insurance companies!
Get a Free E&O Insurance Quote today and compare rates from multitudes of carriers!