Errors and Omissions Insurance

The professional services industry is a competitive yet rewarding line of work. Yet it’s also one in which simple human errors can quickly turn into a nightmare.

Imagine an attorney that forgets to include one line of verbiage in a significant clause or forgets to file paperwork on time at the courthouse, or a security engineer that accidentally leaves a flaw in their code making a business vulnerable to a cyber-attack.

Service Professions Face Unique Liabilities
Fact is, in addition to standard business concerns, companies that offer professional services also need to worry about lawsuits brought by clients who feel that they (in some way) sustained damages as a result of error or negligence during the course of their contract with you.

For those businesses offering professional services, no matter the industry, Errors and Omission (E&O) insurance can provide valuable protection from liabilities that arise as a result of, or as part of, professional services rendered.

What is E&O Insurance?

Errors and Omissions Insurance, also called professional liability insurance, safeguards businesses and professionals from mistakes that can cost them thousands of dollars in legal fees and lawsuits. Businesses that offer professional services are at an elevated risk for claims of errors, negligence, or inaccurate professional advice that could potentially cause a customer to suffer losses or damages of any kind.

Why Businesses Need E&O Insurance and Why it’s Important

No business can escape human error. No matter how well-run a business is, employees can still make mistakes and risk management practices can still falter. There are certain types of losses that simply are not covered under a general liability policy.
Coverage Basics
Errors and Omissions Insurance covers the intangible loss of reputation for both the client and the professional who entered into a business contract with them. E&O insurance is an important means of protection for businesses who stand to lose it all due to a lawsuit brought on by an unhappy client who is aiming to sue for error, omission, negligence, or wrongdoing — whether the business was at fault or not.

Under Errors and Omissions Insurance, things like work errors, undelivered services/omissions, misrepresentation/inaccurate advice, and negligence are fully covered. It’s important to note that Errors and Omissions Insurance does not cover criminal prosecution, bodily injury or property damage, fraud, matters involving employment, false advertising, trade and patent secrets, or invasion of privacy.

Additionally, Errors and Omissions Insurance covers:
  • Actual or alleged negligence
  • Defense costs
  • Copyright infringement
  • Claims and damages
  • Personal injury
  • Claims arising from past services
  • Worldwide coverage
  • Temporary staff and independent contractors

Types of Errors and Omissions Insurance

As with any type of insurance coverage, it’s best to buy Errors and Omissions Insurance as soon as possible. Basic E&O policies can include a number of different types of coverage. Since the same policy will not work for all businesses, business owners should be sure that the coverage being offered will fit the unique exposures of their company.
Types of E&O Insurance
There are a few types of Errors and Omissions Insurances out on the market today. The most well-known types, however, are malpractice insurance and liability insurance. The type of coverage you choose will be dictated by the industry that your business is in. For example, malpractice insurance is mostly chosen by healthcare professionals such as doctors, dentists, chiropractors, and surgeons. Other professionals such as attorneys, engineers, accountants, and architects will choose professional liability insurance.
No Coverage for Criminal Acts
Errors and Omissions Insurance will not, however, cover all potential liabilities or criminal prosecution. Companies that break the law may still face criminal and civil proceedings.
Protection for Any Profession
Regardless of the type, malpractice or professional, Errors and Omissions Insurance will protect companies and professionals in the event of a lawsuit no matter what profession the policyholder is in.
Some other professions that Errors and Omissions Insurance covers are:
  • Commercial printers
  • Designers
  • Advertising agencies and professionals
  • Fashion designers and professionals
  • Transportation, shipping, and fulfillment companies
  • Tattoo artists, makeup artists, massage therapists, and aesthetics professionals
  • Wedding planners
  • Coaches and trainers
  • Consultants
  • Web design and hosting companies
  • Translators

The Future of Errors and Omissions Insurance

Errors and Omissions Insurance claims have consistently been on the rise, due in part to the expanding service industry in the United States, and also due to our society’s litigious nature.

Even in matters where a company or professional does everything in their power to do the right thing, they still find themselves on the receiving end of a lawsuit.

Likewise, thanks to a tough economy, many businesses are reducing staff size in an effort to bring down costs. The resulting increased workloads and mounting pressure ultimately leads to increased stress and more errors. And errors, coupled with external factors beyond a company’s control, like weather, storms, and natural disasters, can eventually lead to claims.

Build your Life Raft Before the Flood
Even though companies and professionals cannot prevent a negligence claim from being filed, they can still arm themselves with Errors and Omissions Insurance to help offset financial costs and defense expenses from costly lawsuits brought down on them by disgruntled clients. For more information about Errors and Omissions Insurance and what it can do to protect your business and livelihood, contact the reputable agents at Hightower Risk in Jacksonville, Florida today.

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4651 Salisbury Road Suite 400
Jacksonville, FL 32256