Errors & Omissions insurance, otherwise known as E&O insurance, is a type of business insurance that protects a small business owner from claims in the event that a client holds him or his company responsible for errors or for the failure to perform work as specified in a contract. In the medical world, errors and omissions insurance is coined malpractice insurance while for professionals, it’s often called professional liability insurance.
Why is errors & omissions insurance a must for the small business owner? Because an omission or error can occur in practically any transaction or profession, that’s why. Basically, if you’re an individual or business providing service to clients for a fee, you open yourself up to errors and omissions exposure. More importantly, a lawsuit for an error or omission can bankrupt an individual or small business that doesn’t have insurance.
Who can benefit from E&O insurance? Insurance agents, attorneys, real estate agents, real estate brokers, accountants, financial advisers, dentists, chiropractors, advertising agencies, web hosting companies, wedding planners, architects, engineers and a host of other business professionals are subject to mistakes in their practice, some of which may cause financial harm, loss of good will or a damaged reputation to another person or company.
E&O insurance protects an individual or their company from having to bear the full cost of the error or omission. This type of business insurance covers defense, judgment and settlement costs for lawsuits as well as related costs of property or lives lost resulting from an error or omission when providing covered professional services. Even if the lawsuit if found to be groundless and you are found to be innocent, there still may be legal costs involved, which may be too steep for the small business owner or business professional to afford.
Even the best business, with the best employees, with the best risk management practices in place can make mistakes and become subject to lawsuits. For example, what happens if you ship a critical customer order to the wrong location? Perhaps, you’re a wedding planner and provided the wrong date to the cake maker. Without insurance, not only will the wedding planner have to incur the loss, which could be up to $12 per wedding cake slice, but what about the emotional toil to the bride, groom, family and friends.
As you can see, even the slightest mistake can have a huge impact, financially or otherwise. Protect yourself today with errors & omissions insurance.
