Errors and Omissions insurance coverage
Often known as E&O insurance or professional liability insurance, Errors & Omissions insurance provides coverage for businesses for professional mistakes made while providing a business service. These mistakes could be due to negligence, errors, omissions, misrepresentation, violation of good faith or simply inaccurate advice.
Any of these missteps could result in a costly lawsuit that could cripple your business and in some cases drive you completely out of business. So having professional liability coverage could save your business and save you the high costs of a painful lawsuit. Errors and omissions insurance includes coverage for attorney fees, court and administrative costs as well as settlements and judgements.
Many small business owners assume that errors and omissions insurance is only for large businesses or high risk occupations such as doctors, architects or construction firms. Unfortunately the nature of claims filed under professional liability insurance beg to differ with this assumption. Most errors and omissions claims are filed by businesses in occupations such as accounting, advertising and education. Consulting companies are also at a high risk for these claims as improper advice could result in an expensive lawsuit.
COST FACTORS AND DISCOUNTS
There are several factors that determine the cost of E&O insurance: type of your business and the risk it represents is the main factor. Other factors include of course the coverage limit desired, your business location, number of employees and your claim history.
Most insurance companies offer discounts to help businesses lower the cost of their E&O insurance . This could include training certificates employees obtain to further their education and expertise to avoid mistakes in the workflow and quality control steps conducted by the business managers to ensure consistency of the work procedures.
Like any insurance policy, there are always exclusions to be considered. Most errors and omission policies exclude illegal acts and purposeful wrongdoing. Other exclusions apply as they should be covered under other types of business insurance policies. Bodily injury is usually excluded as it is covered by the business liability policy and employee injuries are excluded since they are covered under workers’ compensation coverage. Discrimination and harassments are also excluded and business should get employment practices liability to make sure these perils are covered.
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