Errors And Omissions Insurance: A Business Necessity
The capitalist market is amazing in terms of the vast variety of services and products that it can provide an economy
. Businesses cut lawns, do hair, keep your money safe, build homes, and repair broken products and an infinite amount of other things. It is easy for consumers to forget about a business needing to plan for a situation where something goes wrong and a customer or other business is damaged financially. It is obvious that the fair choice is to have the business at fault fix what has happened however, service industries like real estate, insurance, architecture or some type of brokerage can be involved in transactions that are huge and can bankrupt a company in court trying to write a financial wrong that it has caused. For these reasons and others, businesses carry what is known as errors and omissions insurance to protect the company and its employees after unfortunate events have happened.Errors and omissions insurance coverage has been around for some time and is a specialized type of insurance for professionals in knowledge based industries such as mortgage and other financial brokerages, insurance companies, real estate companies and even doctors. Errors and omissions coverage is also found in many other product based industries. Malpractice insurance is a form of E and O coverage. It should be noted that these kinds of coverage are different from general business liability and property damage policies.
This type of coverage pays out when there is financial harm done to a customer personally or to their assets and the matter winds up in court. It covers costs from litigation such as attorney fees, court costs, and settlement or award payments. Although different companies have varying language in their respective policies, an E and O policy is used when a professional in their industry makes a mistake of some type that causes financial harm to a customer. For example if a Realtor causes his or her client to suffer some type of financial harm arising out of an agency contract, E and O insurance may be used. In a lawsuit, a plaintiff may argue that they relied on the Realtor's advice and guidance to purchase a home that they did not know had a tax lien on it.
Omissions and errors happen every day in the business world to businesses that have the best intentions. Civil suits can drag on for months and in many cases years before they come to an end. Having added legal costs for these time frames, especially for smaller companies, can significantly drain businesses resources and even cause it to go bankrupt. Having errors and omissions insurance helps to deflect some or all of these types of unexpected costs. It also helps ensure that consumers can indirectly repair financial damage.
Errors And Omissions Insurance: A Business Necessity
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