subject: The Importance Of The Errors And Omissions Insurance Policy [print this page] The Importance Of The Errors And Omissions Insurance Policy
Most business owners usually take out a general liability insurance to cover the firm in case of the unexpected. However, this form of insurance may not cover the corporation in all cases. This is the precise reason business owners and corporations need to take out an errors and omissions insurance policy. This policy is also called an E & O Insurance policy and it is becoming increasingly popular these days.
For a start, it would be perfectly in order to understand clearly, what this is insurance policy is all about. The concept of errors and omission can be quite vague. Therefore, it is not surprising that this policy may cover many areas. If a customer does not receive his or her goods on time, the supplying firm may be sued for loss of income arising from the delay. To be sure, the supplying firm did not deliberately delay the goods in question. However, this is not a defense in law. If the litigant wins the case, huge damages may be awarded against the firm that supplied the goods.
A computer software firm may also be held liable if a program or software from its stable destroyed the customer's hard disk. Corporations can be sued for supplying the wrong products to their clients. It is also possible for clients to sue an investment adviser if the client loses money based on advice from the investment expert. There are some extreme cases where an individual or a company may sue another outfit even when it is clear that the other outfit is not culpable.
It has to be pointed out clearly, that even if the defendant wins the case, the legal fees incurred in the process can often be on the high side. This is where the E & O insurance policy appears. The purpose of this policy is to cover the corporation in case the unexpected happens. It is a fact that general liability insurance may not always be adequate to protect business owners. It is also a fact that there are certain people who take delight in suing other people on very flimsy grounds. In such cases, the sensible to do would be to take out a professional liability insurance and guard against the unexpected.
The premium for this form of insurance can be quite steep. However, it is well worth the cost because this policy can make the difference between going under and remaining in business. Another advantage of professional liability insurance is that it can actually discourage extended litigation. A plaintiff may opt to settle out of court if it is known that the defendant is covered by professional liability insurance.
Some years back, the E & 0 insurance policy was virtually unknown. These days however, it has become an important part of the insurance portfolio of most small and large corporations. This is ample evidence of the importance of this policy. It is also a confirmation of the fact in the business world; nothing should be left to chance.
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