Error omission insurance is a must have for any professional whether as an employee, employer or single entity in one’s own business. Clients can find any reason to pursue a lawsuit whether or not they have a solid basis for a claim. With an e & o policy, a professional can protect his or her good name should he or she become the target of a lawsuit. This policy will prevent the policy holder from having to pay full expenses out of pocket for legal defense as well as for any damages that have to be paid out.
Most of these policies do not cover punitive damages. They also do not cover fraudulent, intentional or illegal claims. This coverage is also different from general liability and commercial property insurance as well. It does not cover the tangible aspects of the business such as buildings or vehicles one needs to conduct operations. Furthermore, many states require that professionals carry a minimum amount of this coverage, but that amount will vary from state to state as well as for each industry.
If one has a small business that uses multiple employees, error omission insurance is essential. Since the boss cannot be everywhere, it is important to cover all employees at all work sites whether they are employed directly under the company or are independent contractors. Any mistake can happen and the business owner is liable even if he or she is not present. Having enough coverage to take care of all workers at all work sites will save the business owner a lot of trouble should a mistake somehow occur.
If possible, one should try to obtain this policy before one begins to practice. He or she may be able to get lower rates with a clean record. In addition, this policy may not cover incidents that occur before the policy was bought. Another factor one should when looking for an insurance provider is if the carrier is experienced in professional liability insurance. Many of them not only have specialities in this area, but some may also have policies that target specific industries, which may be good for those who are not sure where to start with this kind of policy.
Professionals need the protection of an error omissions insurance policy. A lawsuit will affect a business even if there is no basis for the claim. Legal defense fees and court costs can build up even if the policy holder does not have to pay out any damages or a settlement. Should a mistake actually occur, the business owner does not have to worry about losing everything because of a single incident. Each individual must decide what type of and how much coverage will suffice.