Basic Facts About Professional Errors and Omissions Insurance

Professional errors and omissions insurance protect a company in case a client or

customer holds it responsible for errors or a failure to perform the services as promised in a contract. Errors and omissions insurance do not fall under a commercial general liability policy. It is only one part of professional liability insurance, but a very necessary one for businesses that cannot afford to be bogged down in litigation.

This policy is like the equivalent of a doctor's malpractice insurance. It protects the company in the event of a mistake made by anyone working for the company. This insurance covers the company's legal defense costs and other court costs including any judgments ruled against the company. This coverage can extend to W2 employees and any 1099 subcontractors that may be working for the company. This type of policy may be purchased before services have been conducted or after a product or service is already on the market.

Professional errors and omissions insurance should also have options for those who need to protect intellectual property. This does not only mean written property but developments such as processes, software and systems need to be covered, especially if this is a business primary product. Copyright infringement should also be considered. Personal injury coverage in the case of invasion of privacy, libel and slander may also be necessary for some industries. Companies dealing with international interests need to make sure their coverage is extended worldwide if a suit is brought in the United States.

E&O liability insurance can cover most types of businesses such as advertising agencies, book publishers, communication consultants, data processors, employment placement agencies, franchisers, graphic design services, health care consultants, investment advisors, landscape architects, media representatives, notaries, online transactional businesses, process servers, quality control consultants, registered investment advisors, software publisher, third party administers, web site designers and many more industries. With so many industries covered, a company may want to find a provider that specializes in that particular industry to be sure it gets the best policy to suit its needs. There are providers that may specialize in technological or IT industries, those that may focus on media industries and those that may focus on real estate and architecture.

Businesses should have professional errors and omissions insurance no matter how small the business or how small of a chance there is that a legal action will be taken against it. E&O insurance will cover a business even if the claim is baseless. All businesses need this safeguard in this litigation happy society. No matter how efficient or well run a business may be, none are except from the possibility of a lawsuit stemming from a claim of negligence even if it is clearly false.

Basic Facts About Professional Errors and Omissions Insurance

By: Bob Roberts

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