What is Errors and Omissions Insurance?
Errors and omissions insurance is a type of professional liability insurance that helps protect business owners who provide advice and services. It's needed in any situation that your business could be found legally liable for faulty advice or for negligence when it comes to a professional service.
It helps to protect businesses, workers and other types of professional service providers from claims made by clients.
How Does Errors & Omissions Insurance Work?
To look at how errors and omissions insurance works, let's take a look a an example, which was originally posted on Investopedia
"Let's say a company that hosts servers used by third parties for data purposes is breached by hackers who gain access to proprietary information and client data. The companies affected by the hack then sue the server-hosting company for damages for inadequate security. The server-hosting company has an E&O insurance policy and reviews it to see what the policy does and does not cover. To the company's benefit, its errors and omissions policy is robust and covers such situations. The insurance company pays for the legal expenses involved in the court case against multiple companies. It also pays for any monetary damages rendered by the courts or settled in arbitration."
What Does Errors & Omissions Insurance Cover?
As you can see from the example, E&O helps to protect businesses from taking potentially catastrophic losses if the company is sued. Plus, E&O helps you to cover the legal fees associated with these cases.
If anyone who provides service or advice in your business is legally responsible for damages due to claims of inadequate work or negligence, Errors and Omissions is vital to protect all parties involved. It's for this reason that Errors and Omissions insurance is typically required for service based businesses and professional to carry.
Who Needs Errors & Omissions Insurance?
If you work in a professional service industry or offer advice to clients then the likelihood that your going to need errors and omissions insurance is high. Here's a short list of career fields that must have E&O insurance:
and that's just to name a few...
Do I Need Errors & Omissions Insurance?
If you provide a service or speak in a consultative manner at all you could be sued for negligence. That means that you should at least consider having a policy even if you don't have a licensing board or partnership that requires one.
How Much Does Errors and Omissions Insurance Cost?
The average small business that has a policy typically pays roughly $1700 per year. However, that number can vary greatly based on the business industry and the policy limits a business chooses.
It also changes based on several risk factors including:
If you are a contractor, as many of our clients are, having an E&O policy is going to be important for you and any subcontractors you used to have. You should also expect to pay a higher rate than many other types of businesses simply because if a builder makes a mistake a building might collapse. That makes the potential cost of an error higher for the insurance company and so it translates to a higher premium to the business owner.
The best thing you can do to keep manageable rates for your errors & omissions insurance is to do business with an independent agency like Ferguson Insurance Center. Being independent allows us to find the best rates for your business from over 50 insurance carriers without favoring one insurance carrier or the others.
Plus, we work for you, which means that you don't have to spend time on hold with the insurance company. Just call us and we'll take care of the problem for you.
How to get an Errors & Omissions Insurance Quote
Getting an Errors and Omissions policy is simple, just click here and fill out the form on the next page to get a quote
or Call Kelcee at 1 (888) 258-8808