Why Errors And Omissions Insurance Is Important To Professionals
Why Errors And Omissions Insurance Is Important To Professionals
Business and professional people have different insurance needs than others. Professionals need some type of error and omissions insurance to protect themselves in the event of a lawsuit even if the claim is baseless. In this litigation-happy society, people are prone to bring up lawsuits over any kind of dispute. Even if the case is ruled in favor of the professional and no claims have to be paid, he or she is still responsible for legal defense fees. This insurance is necessary in order to provide protection for a business and any professional working within it.
Some states even require professionals to carry E & O insurance, so it is important to check the laws according to each individual state. Those who do not have their own individual practice may have coverage under a company policy. However, most professionals still prefer to get extra coverage in order to insure that they are protected individually. Sometimes a company policy will not cover some of the expenses that may arise in an individual lawsuit, so this policy may not be enough to cover an individual's needs.
Errors and omissions insurance is not covered under a commercial general liability policy. In other words, there is no coverage for contract performance disputes, errors or other kinds of professional liability issues. It is easier to get a good rate on this insurance before one begins to practice. If there has already been some type of legal dispute, not only will this affect the rate of the premium, but it will also not cover the expenses of any claims brought before the policy was purchased.
The type of policy one needs will depend heavily on the industry in which one practices. All doctors need malpractice insurance, so other professionals need coverage tailored specifically to their industries. This is especially important for business owners who have employees and/or independent contractors working under them. There should be a policy in place to cover potential mistakes of not only the employer but also those hired to work under this employer. Furthermore, the policy should cover a wide area, worldwide if possible, to protect any work done anywhere under the company's name.
Having errors and omissions insurance is one way to help protect a businesses' or professional's name or reputation. If one works with investors or venture capitalists, he or she may be required to have this insurance so that they may protect their investment. When choosing a policy, one should go to a company or source that not only specializes in this kind of insurance but also has a deep understanding of this kind of insurance within that particular industry. One should not take chances with this very important safeguard.
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