What Is Errors & Omissions Insurance?
Errors and omissions insurance is a form of professional liability insurance meant to protect businesses against claims of negligence or inadequate work. More specifically, negligence can refer to advising a client that a certain business strategy should be used even if you know that the venture’s got too high of a risk. If you get sued for such actions, E&O insurance can cover the damages and court costs whether you win or lose.
Who Needs Errors & Omissions Insurance?
Any company that has a degree of risk involved with its services should have this type of policy. This includes insurance brokers, financial planners, regulated financial brokers, Technology consultants, stock and commodity brokers, engineers, general contractors, nonprofit organizations and even wedding planning firms. Doctors and dentists also have malpractice insurance, which is just a specialized form of E&O insurance. If your business has a record of litigation against it, this type of insurance will be more expensive and less favorable in terms of benefits.
What Does Errors & Omissions Insurance Protect You From?
As mentioned above, it protects you from any damages that might incur if your company’s held liable for omitting certain risks that it should have seen coming in any given venture. For example, your firm could be sued for withholding information about why an investment is risky or for inadequate security in the event of a security leak. In either event, a good E&O policy will cover your legal fees and any damages you may end up having to pay. It can also cover your fees if you win the case, which can keep you from facing a potential bankruptcy case.