subject: Errors And Omissions Insurance, Why You Need It [print this page] Errors And Omissions Insurance, Why You Need It
Errors and omissions insurance is liability insurance for businesses and professionals. Obtaining a policy will assist in paying for the costs associated with a lawsuit in the event of a claim. Businesses and professionals in the service sector such as insurance, health care and any industry that provides a service have increased error an omissions risk.
Employees make mistakes and most businesses maintain a policy in the event a mistake occurs that may harm a client financially. Even top professionals make mistakes and it may be prudent to maintain an error and omissions policy. It is best to seek the advice of an insurance agent to evaluate your financial risk and determine the best coverage to minimize your risk.
You want to choose an insurance agent that is knowledgeable and experienced with this particular type of insurance. The process of obtaining insurance is rather complex. The underwriter will examine any previous claim history and if you do not have a history, the underwriter may still investigate further to determine whether you have sound preventative procedures in place or whether you are simply fortunate in avoiding claims. You may be required to produce copies of business related documents such as contracts, quality control measures and standard operating procedures. Unfortunately, until you actually apply for a policy, you cannot be sure of the information you will be required to provide. This will depend on the level or your possible risk exposure. The higher your risk, the more likely you will be required to produce such business documents.
Your insurance agent will help you evaluate your possible risk exposure, which will determine the amount of errors and omissions insurance you should carry to minimize your financial risk. The calculation of premiums considers the amount of coverage you require, the type of business you are involved in and the level of your potential risk. The premiums vary across business sectors. For example, coverage for the medical profession is much higher than coverage for a professional wedding planner. It is critical to select a policy that will meet your financial needs in the event of a claim against you or your company. If the cost of the premium is too high, you can choose a lower limit until you can afford the coverage you need. Lawsuits are expensive and you should have a policy to help defray your financial burden in the wake of such an event.
Many businesses and professionals fail to add error and omissions insurance to their insurance portfolios. In this litigious society, this is a mistake, which may threaten the financial future of a company or a professional. If you do not currently have a police, it may be wise to reconsider obtaining one.
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