Even the best of businesses will occasionally have an oversight, which is exactly where errors and omissions insurance comes into play.
You may know it as professional liability or, by its abbreviation, E&O insurance. It is only natural that at the beginning of providing your services, not all your ducks are going to be in a row. Fine tuning a business always takes some time. However, during that time, unhappy and unsatisfied customers, may choose to take you to court for a number of reasons.
The legal fees alone are enough to cost you quite a bundle and throw your entire financial planning in chaos. Errors and omissions insurance is designed to help you avoid this from happening.
Errors and Omissions insurance comes into play when you fail to deliver on services that your promise to your clients. This could be from an error or oversight on your part, or not delivering as promised due to poor quality or missed deadlines.
Court expenses and other related fees.
Court-ordered settlements and compensations.
Lost income from time spent in court.
Miscellaneous expenses related to defending yourself.
Standard E&O policies have exclusions just like auto and home policies do. For example, the professions that are considered extremely high risk may have difficulty procuring a good insurance policy.
When opting for such a coverage, you need to be careful and select one with terms and conditions that will provide adequate coverage for the risks that are the most likely to happen to your business.
The overall cost of errors and omissions insurance can vary depending on a few factors.
The average cost of errors and omissions insurance will vary depending the size of your business and it’s revenues, past experience, the types of services rendered, and your overall coverage limits.