E & O Insurance - Necessary Protection?
errors & omissions A Waste of Money?
E&O and other similar professional liability insurance policies can be critical for professionals whether they are licensed or not. Gone are the days when only doctors and other high profile professionals needed to cover their rears with malpractice insurance and other related policies.
Today eye doctors, realty professionals, physicians assistants and insurance agents are being sued for their errors or omissions. Not having an insurance policy that can protect you against legal action can mean that your career is over and that your home is sold to pay damages.
Being negligent can start with something small that snowballs into something catastrophic. You might accidentally discard a page from a client's file or shred the wrong piece of paper. This might cause you to give a client bad advice or miss a deadline.
Nobody can make the correct choice every single time. Having a policy that protects you from the human error that we are all subject to can save your rear.
What is errors and omissions insurance? It is similar to a physician's malpractice insurance. It protects you the professional when a client sues you because you've made a professional mistake that hurt them.
You should know that professional liability is not covered by a general liability insurance policy. So even if you have insured yourself with a general liability policy, you still have exposure to the risks that are part and parcel to your profession.
What is not covered by errors and omissions? These professional liability policies are not designed to cover anyone for criminal acts. They will not cover you for acts that are dishonest or fraudulent.
Neither general liability insurance nor professional liability insurance is designed to cover dishonest or fraudulent acts. They are designed to protect a professional from negligence.
An honest mistake shouldnt force you to end your career or wipe out your life savings. E and O coverage is designed to cover inadvertent mistakes and allow you to continue on with your life and career.
An errors & omissions policy is, however, likely to cover you if you are sued due to an error you have made in your business or profession that is unintentional. Just as important is the fact an errors and omissions policy will cover you when you haven't made a mistake, but someone is still taking you to court.
Each generation tends go get more litigious. Professionals are being sued now at a rate that was unthinkable a generation ago. If you believe that you are in a profession that makes being sued likely, you just might be correct.
There doesn't appear to be any limits to what a professional can be sued for. Sometimes the professional has made a mistake. Sometimes the lawsuits are laughable, but being sued can be costly whether or not you have any reason to believe that you have done something wrong.
If you are sued, you will probably find that your errors and omissions insurance company will pay for your legal defense. The cost of the legal defense will not be deducted from the amount your company might pay to the party suing you. This can mean a savings of a boat load of money. Being sued can be costly even if you are not guilty of a professional error.
If your profession puts you in a position of trust and a high standard of conduct is expected of you and other members of your profession you may need an E & O policy whether or not your employer mandates it.
The number of lawsuits filed against professionals tends to increase during tough times. Those who are out of work are more likely to sue. Not acting before you are hit with a lawsuit could mean the end of your career and any nest egg that you have saved.
by: Alston Balkcom
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