Business insurance quotes

Errors and Omissions Insurance

What would you do if a client holds you, or your company, personally responsible for a service that you have provided, or indeed have failed to provide? What would you do if a client complains that the service you have provided did not meet their expectations or produce the results that you promised? This may prove to be an extremely difficult time for both you and your company, and this is specifically why you should have errors and omissions insurance. This type of insurance is often referred to as malpractice insurance or professional liability. No matter what specific name is given to this insurance, it is able to cover you for any errors or omissions that you may have made or that a client believes you have made.

The vast majority of errors and omissions insurance policies will cover you for settlements, judgments and defense costs. Even if the allegations are completely false, you are likely to have to spend thousands of dollars to defend a lawsuit. If you are an individual or small company this may lead to financial ruin and even bankruptcy, although it is likely to have a lasting effect on a larger company as well. Errors and omissions insurance will basically protect you if it has been perceived that you have caused a client a financial loss.

Errors and omissions insurance is most commonly used by doctors, lawyers, engineers, architects and accountants. However, with that said, this type of insurance can provide peace of mind for the vast majority of business individuals and companies. If your business revolves around providing a service for which a client will have to pay a fee, then you are likely to be exposed to errors and omissions at one time or another. If for any reason you are unable to provide a service on time, or the service is not completed correctly, this will presumably cost your client money and may even harm their reputation.

Having an errors and omissions insurance policy in place is simply acting responsibly. Let's face facts, no one is perfect and even the best employees are prone to making the odd mistake. A simple example of this may be a wedding planner who reserves a reception hall, the caterers, flowers and band for a specific date. However, the booking has unfortunately been made one week early and everyone bar the wedding party and guests turn up. This mistake is likely to cost a lot of money, and will also provide the wedding party with much emotional distress.

You should also take into consideration the loss of reputation for both you as a company, and your client. Therefore, purchasing errors and omissions insurance is an extremely sensible measure. In fact without this type of insurance you are posing yourself with a very serious financial risk. You will actually find that these specific types of losses will not be covered under a general liability insurance policy. As mentioned, even if the error or mistake was not your fault, the process of litigation is known to be both expensive and time-consuming.

You should always purchase an errors and omissions insurance policy prior to any of these events occurring. In fact it should form part of your overall insurance portfolio. There may even be certain contracts that you will make with a client that will need to have insurance in place, and often this can also prove to be a great selling point. Not only will errors and omissions insurance protect you, it is able to provide your client with peace of mind, in that they know they will be compensated if an error is made.

Errors and omissions insurance is very much like any other type of insurance policy. There is no one specific policy that will suit every business. Therefore, it is advisable that you fully understand what coverage is being offered, and this coverage is able to fit your exposures. The vast majority of errors and omissions insurance policies will be underwritten on a "claims made" or "claims made and reported" basis. This will typically mean that a claim must be made, or made and reported, within the period that the policy is in place. This will mean that any claims made prior to the date of your policy becoming active will, unfortunately, not be covered.

The actual cost of errors and omissions insurance will vary in accordance with your class of business, claims experience, location and, of course, from insurance company to insurance company. You may actually find that certain insurance companies offer far more competitive and favorable errors and omissions insurance for certain professions, whereas other professionals or tradesman may not be able to purchase such a great deal from a specific insurance company. This is why it is extremely important to shop around for errors and omissions insurance to ensure you are able to find the perfect insurance policy to suit both your business and individual circumstances.

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