Are you starting a business of your own? Or are you a professional rendering your services or advice to your clients? You should consider purchasing errors and omissions insurance that protects professionals from honest mistakes that you may make in the course of your daily business.
What Is Errors And Omissions Insurance?
Errors and omissions insurance is often referred to as simply E&O. Depending on the profession of the individual, it can also be referred to as Errors Omissions, E&O Insurance, Professional Liability, Professional Liability Insurance, and Malpractice. Most people are familiar with malpractice insurance as it relates to the legal and medical profession. This is a certain type of insurance that will cover you as a professional. It can also be used for to provide overarching protection for your company or business. A consulting firm, for example, could use errors and omissions insurance to provide blanket type of coverage for the employees who work there. There is an unavoidable fact that your customers may hold you responsible for the services you rendered that did not meet their expectations. You may find that they hold a grudge when results were not favorable or if you have potentially failed to provide the right services that they are seeking.
Whether it is an honest mistake on your part or just an allegation, it often does not matter. This will still certainly hurt your business and your career in more ways than one, lead to fewer clients, and cause needless distractions. If you or your business is sued, the settlements, the defense costs, and any judgments against you are very pricey matters. Errors and omissions insurance provides you with the money to defend yourself from these cases or can help you settle the claims on your behalf. Even if you are not the one at fault or if your business was just dragged along with a case, you will still be required to defend yourself or your business, and that can potentially cost you a fortune. At least, with errors and omissions insurance, you have some sort of a financial safety net to fall back on.
Who Needs Errors And Omissions Insurance?
Almost every professional and businesses that dispense advice or provide a professional service needs errors and omissions insurance. If you are one of the best professionals in your field, if you have not made any mistakes yet, or if your business is one of the best out there and that it rarely produces minor errors, this still does not fully guarantee you that nothing will ever go wrong. Everyone is bound to make a mistake. This happens all the time no matter how benign or accidental the case may be. Someone may sue you based on the outcome of your professional advice. Defending the lawsuit will cost you a lot, and you need the errors and omissions insurance to help protect yourself and your business. So whether you are a doctor, an accountant, an engineer, financial planner, a lawyer, or other professional providing a needed service, you should protect yourself with errors and omissions insurance.
When Should You Purchase Errors And Omissions Insurance?
Perhaps the best time to get an errors and omissions insurance policy is when you are just starting out with your business or profession. You never know when you will need that type of insurance. Before you purchase errors and omissions insurance, you have to know first if you are qualified by contacting your insurance company. Typically insurance companies want you to prove that you are qualified to dispense certain advice usually through a certification such as the CFP, CPA, or passing the bar before they will issue you errors and omissions insurance.