Does my business need Errors and Omissions insurance?
E & O insurance is a form of liability insurance for business. Many professions -- including real estate agents, attorneys, architects, consultant, web developers and other professions -- should have this specialized liability coverage. Almost any type of transaction is subject to causing, or the perception of causing financial harm to another.
This type of liability insurance will help cover legal expenses and court costs as well as any settlements or judgments brought against you or your company for professional services and advice. Aside from "Errors and Omissions insurance, E & O insurance is known by several names. In addition to Errors and Omissions, it can be known as Professional Liability Insurance or Malpractice Insurance. It's important to remember this coverage is not included in your general business liability insurance.
Errors and Omissions insurance is unique to every situation and carries a variety of coverage as well as exclusions. In general, it is designed to protect the business from legal costs and damages awarded as a result of being found in error, an omission, or a mistake.
Legal costs associated with many lawsuits can cripple a company, and this coverage protects against that and large awards by the court. E & O Insurance doesn’t cover intentional fraud or illegal activity as well as most punitive awards.
It needs to be noted that lawsuits are not just a result of error, but the allegation of error or negligence. In this day, we live in a suit happy society. Many innocent parties are sued for any variety of reasons, not only a just cause. Professional liability will help reduce the risk of cost associated with being sued.
When E & O insurance is needed, work with your licensed insurance professional to design the best affordable coverage. Ask questions and make sure you know not only what is covered, but any exclusions in the policy.