If you are in charge of your own commercial insurance portfolio chances are you have heard of professional liability insurance. Small business owners managing their own insurance policies must educate themselves of policy types and coverage options. Not all professionals have a need for all commercial insurance policies. While every business owner should carry general liability insurance, e & o insurance is much different. If you are wondering what all the fuss is about and whether or not you should invest in errors and omissions professional liability insurance refer to the information below and make an informed decision.
General liability insurance and errors and omissions insurance differ significantly. General liability insurance should be carried by every company and is designed to cover claims of injury or damage. For example, if a customer were to enter your premises and claim you were negligent for their injuries because they slipped and fell, your general liability insurance coverage would kick in to pay for medical bills and any costs that may result from the claim.
Professional liability does not cover injury or damage claims. It is specifically designed to cover errors you have made in the course of doing business that have financially harmed your client. If you are in the business of giving advice or providing a service, you have a need for professional liability insurance. Professionals in a variety of different industries have a need for e & o insurance. Some of the primary professionals carrying errors and omissions insurance include mortgage consultants, loan officers, financial consultants, insurance agents, real estate agents, personal trainers, counselors, doctors, pharmacists, and IT consultants. If you received higher education or licensing to provide services to the community, you should carry a specialized form of professional liability insurance.
You may ask how the policy will benefit you. If a customer were to file a lawsuit against you because they lost thousands of dollars because you made a mistake you could land yourself in hot water. If you are not carrying professional liability insurance, you will be responsible for hiring your own defense attorney and paying the settlement or judgement awarded. This could potentially close the doors of your business all together. When you carry e & o insurance the insurer will provide coverage to pay for legal defense and settlements or judgements awarded to the claimant. Not only does this protect your business and personal assets, it also protects your professional reputation.
As a professional, you are expected to meet a higher standard in the advice you give. While most professionals would not make an intentional error to harm their clients, mistakes do happen. If you want to protect your business and your career, invest in e & o insurance. Not only can you ensure the mistakes you make can be compensated for, you also can protect yourself against litigious clients with unfounded claims.