Errors and omissions insurance: What it is and why you may need it

 November 5, 2019     UFG Insurance    Business 

What is errors and omissions insurance

Insurance may not be the most exciting topic, but what if I told you there’s a type of liability insurance that can help protect your bottom line?

Now we’ve got your attention.

Errors and omissions insurance: What is it?

It’s important to have the coverage you need to safeguard yourself, your company and your employees against claims of inadequate work or negligent actions. Cue the definition of E&O insurance:

Errors and omissions insurance is a type of professional liability insurance that helps protect the work you do against negligence, faulty advice and lawsuits or claims. These type of claims include customers who have suffered damages because of mistakes your business or employees committed when providing services to the client. This kind of liability insurance often covers court costs or settlements up to the specified amount in the contract.

Who needs it?

Any business that offers advice or provides a service may need an errors and omissions policy. Some examples include those in the financial industry, such as planners, brokers or investment advisors. Outside of finance, general maintenance companies, contractors, nonprofits, and even wedding planners are prime for E&O coverage. Even healthcare professionals such as doctors and dentists often purchase malpractice insurance, a form of errors and omissions insurance.

While not all business types are legally required to carry this coverage, some regulatory or licensing boards require their professionals to carry it. Some of the most common businesses that may need this type of insurance include:

  • Financial Planners.
  • Lawyers.
  • Accountants.
  • Contractors.
  • Engineering Firms.
  • Real Estate Agents.

Want to chat about E&O insurance? Find an agent today!

 

What does it cover?

The good news is that errors and omissions coverage works to protect damages and settlements your company is legally obligated to pay if a claim of negligent action or inadequate work.  For example, let’s say your contracting company finishes up a job paving a new driveway. Two weeks later you receive a call from the customer saying that the driveway is starting to crack, and you find that the concrete you used was incorrect. It is now your responsibility to replace the driveway. E&O insurance may help pay for the additional costs it takes to re-do this project, which can help protect your bottom line.

This coverage may also be used to cover lawsuit fees, such as:

  • Court costs.
  • Attoryneys’ fees.
  • Settlements.

Unfortunately, mistakes happen. That’s life, and that’s why we have insurance. Ultimately your business can be sued by anyone if they feel that they have suffered a loss due to your services or advice.

But there’s no need to fret or let this hurt your bottom line. Make sure you have the correct insurance coverage you need by protecting your business and contacting UFG today!

 

 


The information provided is for informational purposes only. Every attempt is made to ensure that the information is accurate; however, it is not intended to replace professional advice. For more information, see Disclaimers & Other Legal Documents.