If your business provides professional services to individuals or other companies, errors and omissions insurance protects you from financial loss if a client sues you.
What Does Errors and Omissions Insurance Cover?
An errors and omissions business insurance policy, often called professional liability or malpractice insurance, protects you as an individual and as a business if a client sues you for failure to provide an agreed-upon service. Even if your company did provide the service, the client might still file a lawsuit if he or she feels dissatisfied with the work. Consumers typically choose this route when they feel that your company's error caused them financial harm.
In a best-case scenario, the judge will dismiss the lawsuit against you. However, you must still spend thousands of dollars on lawyer fees and take time away from work to defend yourself. Having errors and omissions insurance provides reassurance that you can settle client claims without having a significant financial toll on your business.
Types of Businesses That Need Errors and Omissions Insurance
Any business that provides a professional service to the public is at risk of facing a client lawsuit. People are only human and make mistakes, including you and your staff. You also must consider that it's impossible to please some people and organizations. They use the threat of lawsuits to receive more services beyond the standard expectation. Errors and omissions insurance is appropriate for:
- Wedding planners
- Commercial printers
- Advertising agencies
- Companies offering website design and hosting
- Suppliers to retail stores
In short, any business that provides services to clients for a fee should consider making errors and omissions coverage a part of their overall insurance plan. It's also important to keep in mind that many factors determine your business insurance premium, including your industry and the degree of risk your business poses to the insurance company.
Consider Whether You Want Retroactive Coverage
When you take out an errors and omissions policy, you have the option of making it effective from that date forward or as of a given date in the past. This distinction is crucial because a current or former client may not file a lawsuit against your company for an error or omission immediately after it happens. If your policy was not in effect the date the alleged incident occurred, you are unable to claim damages.
As a business owner, you must make sure that you don't allow your errors and omissions policy to expire when you request retroactive coverage. That is because having a gap of even one day could cause you to lose your prior protection. In a society where people file lawsuits quickly, this type of protection can provide valuable peace of mind. To learn more about business insurance, contact a provider like Westralian Insurance.Share