Businesses that provide professional services should have insurance coverage. There’s always the possibility that someone will sue the business for whatever reason. This is why Error & Omissions (E&O) business insurance coverage is often recommended.
Error & Omissions Coverage
E&O insurance covers businesses in issues dealing with legal liabilities. In the event that the business is sued for negligence or some other reason, E&O will provide financial assistance. The lawsuit could be because of negligence, improper documentation, or misrepresentation on the part of the business. Any event in which the business failed to honor its obligation to a customer or a client can be covered under this insurance.
When Does a Business Need Coverage?
E&O insurance is for businesses, individuals, or associations that provide services. The services must be something for which the policyholder receives payment.
How it Works
When a policyholder faces a lawsuit, the insurance company helps pay for the legal costs. The lawsuit could result from a number of things, including a faulty product or bad product instructions. If this occurs and the policyholder has no insurance, then the business could be driven out of business.
Types of E&O Insurance
Error and omissions policies are specific to certain industries. The policy that best fits a healthcare provider will not be the same as the policy for a legal organization. And a policy that fits a financial institution won’t have the same provisions as one made for a counseling center. In short, an E&O policy isn’t one size fits all. Each policy should be personalized for the policyholder.
Benefits of E&O Coverage
E&O coverage is important because it provides legal liability protection. It covers assets during unforeseen and non-budgeted occurrences, such as lawsuits. The business of being a service provider can be difficult. It’s always possible for an unsatisfied customer or client to file a complaint. Even if the complaint has no merit, it could still get all the way to courts. The possibility of this happening is huge, so it helps to have E&O coverage in place.