What Is Errors and Omissions Insurance For?
Aug 28, 2020
Learn what is Errors and Omissions Insurance and how it can help your business
Mistakes happen; we're all only human. Although your best accountant may seem like walking calculator, they can be prone to mistakes too! The difficult part about accidents or mistakes is that even if you take all the right precautions and measures, sometimes they can still slip through - out of our control. That's why businesses frequently have Errors and Omissions Insurance, especially those with a high risk of liability. We break down the common questions we often get about E&O Insurance to help explain how this crucial coverage can protect your business.
What is Errors and Omission Insurance?
Errors and Omissions (also known as Professional Liability Insurance depending on the industry) is a critical coverage that protects individuals from third-party lawsuits and shields their business from professional mistakes.
Who Is Errors and Omission Insurance Intended For?
All professional service providers should carry Errors and Omissions Insurance, including:
- Real estate agents
- Medical clinics
- Technology experts
- And so on
When Would You Need Error and Omission Insurance?
An E&O policy can help pay for lawsuits arising out of:
• Negligent professional services: Nurse forgets to give medication to a patient and they fall more ill
• Failure to meet contractual obligations: Consultant does not provide adequate services outlined in the contract with a client
• Failure to uphold a certain standard of care: Doctor does not document the final status of their patient at the end of an examination
• Errors and Oversight: Accountant puts down $200,000 in accounts receivable instead of the $2000 actually owing
How much E&O Insurance Do I Need?
For most small businesses or professionals with smaller scale practices, a $2M policy is typically recommended. Depending on the profession and the level of service you are providing, limits can vary. We recommend discussing with a broker as they can help determine the adequate amount for you.
How Much Does E&O Insurance Cost? What Factors Usually Affect That?
The cost of insurance will depend on the level of service you provide and the type of work that your business does. An engineering technician working on generators or turbines for a major oil company will pay more premium than a marketing consultant firm because the risk of error is statistically higher and could be more detrimental in terms of loss (more legal expenses).
We hope that helps explain how does E&O insurance help and other common questions. As we mentioned before, accidents and mistakes happen - even if we follow all the rules and take the right precautions. One of the best precautions you can already take is getting the proper Business Insurance coverage, like Errors and Omissions Insurance, to protect you for whatever may occur. Our Foxquilt team can help review your business, find you customized coverages and provide you with the right limits. You can access exclusive discounts on your insurance by joining the Foxquilt community. Get started today.
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