Error Omission Insurance-3 Frequently Asked Questions
Error Omission Insurance-3 Frequently Asked Questions
What is error omission insurance? It covers a business when it is sued because they failed to meet expectations. This is a huge assistance, because in many instances lawsuits can require you to pay a huge sum of money, rightly or wrongly. Therefore, having coverage is very important. Here are three frequently asked questions about the topic:
#1) What kind of businesses should get this?
Obviously, in theory every business could. However, for practical purposes, some companies need it more than others do. For this reason, professionals, such as attorneys, architects, accountants, etc, commonly hold this type of coverage.
#2) How much will you pay?
The reality is, the policies offered are dramatically different, as the needs of each company will be different. It really depends on what kind of business you are in. After all, mistakes for some businesses are more costly than others.
For instance, if a fast food company gets an order wrong, it really does not have much of an impact. No one is going to sue it. However, if a construction company messes up a major building project, the legal fees could be enormous. Therefore, it really depends on your firm.
In other words, this is not like car insurance, where the coverage is basically the same for everyone. Error omission insurance policies are highly individualistic because of the diversity of businesses covered.
Unlike most other policy types, there are no regular policies. Every time you want one, the underwriter for the firm will look at your individual company and then prescribe you a coverage that is specific to your requirements. For this reason, you cannot just use a broker and get a bunch of quotes.
#3) How do you find the best policy?
Obviously, there are a number of firms that offer this coverage. Therefore, to find the best one, you have to figure out what kind of policy is best for you. Determine how much you want to be covered for, and how much you can afford to pay out of your own pocket in the event you are sued.
The higher the deductible you pay, the less the premiums will cost. Also, improve your quality control processes. This will help you pay less, because an accident is less likely. Also, if you have ever filed an EO claim in the past. In that case, you will pay more.
To find the best firm, simply ask other business owners you know who have this coverage, and see whom they recommend. This really reduces your risk.
The bottom line-error omission insurance is a highly individualistic coverage. The amount you pay is dependent entirely on what kind of business you have, as well as the quality of your operations. To find the best coverage, simply ask other business owners whom they use, and then go with the same company.
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