Americans have a reputation for being litigious. Some lawsuits may be frivolous, others may be justified, but all have the potential to be time-consuming and expensive. Professionals who offer their services to the public are especially prone to becoming the target of a lawsuit. This is an unescapable risk, but one that can be mitigated with Errors and Omissions insurance.
What is E&O insurance?
Errors and Omissions insurance, or E&O, is a type of liability insurance. Several other products, such as professional indemnity insurance or professional liability insurance, have different names but provide similar protection. Just as doctors need malpractice insurance, professionals should have errors and omissions insurance.
What does E&O do?
E&O protects the policyholder against claims of negligent services. Unlike commercial general liability policies, E&O does not generally cover claims involving bodily injury or property damage. Instead, E&O offers coverage for professionals and companies against claims of financial loss that resulted from services they provided. When a claim is made, E&O can cover legal defense, judgements and settlements, up to the coverage limit.
Who should have an E&O policy?
E&O policies can be written to protect a wide range of professionals and companies offering services to third parties. These include:
- Insurance agents
- Real estate agents
- Financial advisors
- Software developers and IT professionals
- Marketing consultants
- Many others
Why get E&O?
Even if you are a very responsible professional who checks and then double-checks all client communications and processes, E&O coverage may still be a good idea for multiple reasons.
- E&O coverage may be required. Some companies and professional organizations require E&O coverage. Additionally, some clients may require the coverage. In these cases, E&O coverage is a prerequisite for doing business.
- Mistakes happen. Professionals can try to avoid making mistakes by working carefully, establishing consistent procedures, communicating clearly and documenting everything. However, even the best of us can suffer a momentary lapse. One such lapse can result in a lawsuit.
- Clients can sue even when you haven’t made a mistake. E&O coverage protects professionals from claims of negligent or incomplete services. Those claims do not need to be valid. A client can sue over perceived errors and oversights whether or not any actual wrongdoing has occurred, and legal costs can be expensive regardless of the outcome of the case.
- E&O coverage gives piece of mind. If you are prone to worrying about mistakes that you might have made in the past, or errors that you might commit in the future, E&O coverage can give you the reassurances you need to sleep well at night and to focus on your work during the day.
If you’d like to learn more about your E&O coverage options, contact Higginbotham.