Errors and Omissions (E&O) Insurance covers your company or you individually, when a client holds you responsible for a service you provided, failed to provide, or that did not have the expected or promised results. Errors and Omissions Insurance can help a business come out on the positive side of a bad situation.
E&O Insurance can provide the necessary protection to cover the costs of legal actions taken against the business as well as settlements that may arise from litigation. E&O Insurance will help you to pay the legal defense fees and retrieve money lost in court. Even if the allegations are found to be groundless, thousands of dollars may be needed to defend the lawsuit. Some E&O Insurance policies will also pay for punitive damages; damages inadvertently caused by a business can have tremendous negative effects on the business’ reputation as well as financial implications. They can bankrupt smaller companies or business owners, and have a lasting effect on the bottom line of larger company. All too often, the financial implications caused by a lawsuit are passed down to future consumers in an attempt for the business to make up for the loss. A solid Errors and Omissions policy can alleviate the financial strain a damage claim can cause; giving the business owner peace of mind should an E&O Insurance claim arise.
Most E&O policies are written on a “claims made” or “claims made and reported” form. This means that any claims must be made or, in some cases, made and reported, within the policy period. These policies have a retroactive date that becomes very important. Claims that arise out of acts committed prior to the retroactive date will not be covered. The farther back the retroactive date, the more coverage provided.
Errors and Omissions Insurance is available in a multitude of plans that can be tailored to work well to suit your specific business needs. E&O Insurance policies can be underwritten in a wide range of coverage often in million dollar increments. Some policies also include the defense expenses within the limit of liability. Some will exclude punitive damages. The wording of these policies can vary greatly, and each policy must be read carefully to make sure the coverage fits the exposure.
The cost of E&O insurance may vary greatly depending on the class of business, location, type of claim, type of product or service you provide, or many other similar business circumstances.. The small deductibles incurred by the business should a claim arise far outweighs the cost of having this vital coverage. If your business has an Errors and Omissions Insurance plan, it can be the deciding factor whether a business stays open and continues to prosper into the future. The more products your company produces or the more services it offers, the more chances it has to make money; but also the more opportunity it has to be on the receiving end of an E&O Insurance related lawsuit filed by a customer.
By not purchasing E&O a company can be taking a serious financial risk. These types of losses are not covered under a general liability policy. And even if you are not at fault, litigation is both time consuming and expensive. Many companies depend upon their Errors and Omissions Insurance policies to help them overcome the difficult periods when they are facing legal opposition; it is considered a key insurance for a business making it through the trying period of lawsuits or claims filed by discontent clients. Contacting a professional Errors and Omissions Insurance agent today will get you on the right track in protecting your business to the best of your ability, Health Insurance Specialists Inc at 301.590.0006.