What exactly are error and omission insurance quotes? Who needs such a policy cover? How important is it? What do I need to know before taking up the policy?
When faced with an E&O claim, the most difficult task is convincing the client that they still have exposure. Clients may have many questions. Some questions are easy to answer while others are a bit technical.
What is E&O insurance?
Errors and omissions is an insurance cover that protects organizations and agencies in case the insurance provider fails or does not offer the expected/promised results. Doctors and those in the medical field call it malpractice insurance. Architects and engineers call it professional liability. Whatever the name you give it, it covers errors that the service provider or client may make.
Most policies of this nature are used to cover judgment, defense costs, and settlements. Though the allegations may be groundless, some money will be needed in the course of defending the lawsuit. Small companies may be rendered bankrupt. As for the large companies, it has a lasting effect.
Basically, E&O coverage offers protection in case an error or omission results in financial loss.
Who needs E &O insurance?
There are certain professionals that must get this cover. They include the lawyers, doctors, accountants and engineers among others. However, individuals may also need the cover. It may be the wedding planner, advertising agencies or commercial printers. As long as your business deals with service provision at a fee, you have an E&O exposure. Individual business owners need to consider this cover as such eventualities may arise.
Why does my company need coverage?
Mistakes happen. Mistakes are not pre-planned. Even the most faithful, committed and hardworking employees risk making errors in the course of risk management practices.
For instance, if a freight attended shipped a package to South Africa instead of South America, the client loses a sale, translating to thousands of dollars, who will pay for that loss?
More reason to get covered today. Also, the loss of reputation between the client and the professional will be less tangible. Any company or business owner who does not purchase this cover is taking a serious financial risk. It is important to note that the general liability cover does not cover such kind of losses. As previously stated, though you may not be at fault, litigation is expensive and time-consuming.
When is the right time to buy E&O insurance?
Just like any insurance policy, it is best to take the policy before the occurrence of the risk. Those in the service industry are exposure to such risks. The E&O insurance policy is a must have.
In most instances, you will find contracts that make having insurance are pre-requisite. Sometimes, it may be a selling point with the clients. It gives clients a piece of mind knowing they will be compensated in case of an omission or error.
Where do I find the E & O coverage?
Different insurance providers have different packages for this cover. It is important that one clearly reads and understands the terms and conditions before agreeing to deal. Always ensure the coverage being offered suits the exposures likely to be experienced. As a matter of fact, doctors, engineers and wedding planners will not be exposed to the same risks.
Most E &O policies must be made and reported within the policy period stated in the agreement. Some policies may include the defense expenses as long as they are within the limits of the liability.
The cost of the policy may vary depending on the claims experience, location, business and the service provider. The most important thing is ensuring you understand the terms spelled in the contract.