subject: Protect Your Business With Professional Liability Insurance [print this page] Error omission insurance, more commonly referred to as errors and omissions or professional liability insurance, is a specialized business liability insurance policy designed to protect professionals in all industries. Business professionals who are held to a high standard because of the education and training they receive are strongly recommended to purchase e&o insurance. While professionals make every attempt to offer their community quality services, mistakes can occur. An e&o insurance policy is designed to cover financial harm causes by the mistake or omission of a professional or company. These policies will pay for several different costs that can arise from a claim. Understand what errors and omissions insurance covers and who needs this type of insurance to keep both your personal and business assets protected.
Errors and omissions insurance specifically covers professional liability risks that are excluded in a general liability policy. While most businesses carry general liability, several overlook the importance of error omission insurance. E&O policies have different coverage types and exclusions depending on the industry in which the professional serves. All standard errors and omissions insurance policies will pay for defense costs, and the amount the customer is awarded from the claim. If the claims adjusters find that the claim the unfounded, they may look further into the claim and come up with evidence to have the claim dismissed. While the settlement and judgment costs can be high depending on the mistake or omission made, a significant portion of claims payouts include the defense costs and legal fees.
When a customer files a professional liability claim, they have the burden to prove the company was negligent in their acts. The insurance carrier providing coverage will pay up to the limits stipulated on the error omission insurance contract. The total includes the costs for defense, settlement, investigative and judgment awards. Intentional, illegal, and fraudulent acts are excluded from the policy and will not be paid even if the claim from the customer is founded. If you want to protect your business assets and your own personal reputation, it is important to protect your company against negligence and allegations of negligence.
The most common types of professionals investing in error omission insurance include real estate agents, insurance agents, financial services professionals, architects, doctors, and other business professionals. The premiums associated with an errors and omissions insurance contract will depend on how much risk is associated with the profession and how much coverage is provided. You must review your insurance quotes to ensure that you are receiving the best possible policy for the money. Inquire on policy coverage exclusions and premiums with an experienced commercial agent and build a comprehensive insurance portfolio that will cover common exposures in your business and industry.
by: Bob Roberts
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