Errors and omissions insurance also known asprofessional liability insurance protects you if a customer sues you for failure to or improperly rendering professional services . Whether you’re a consultant architect engineer accountant or general contractor any business that provides advice or professional services should carry this type of insurance.
What is covered by errors and omissions insurance?
This type of insurance policy covers you if you’re sued by a client for failing to provide or improperly rendering a promised service . Legal fees and compensatory damages are covered although there is often a caveat for intentional acts – generally only negligence and unintentional errors and omissions are covered. Make sure you read and understand your policy documents as exact coverage will vary depending on the insurance company and industry you’re involved in.
Why would you need errors and omissions insurance coverage?
Your traditionalcommercial general liability coveragecovers bodily injuries or property damage claims but it won’t cover you if you are negligent or make an error while delivering professional advice or services (or are perceived to have been negligent or made a mistake). This can include:
- acts of negligence
- inaccurate advice
- violations of good faith and fair dealing
Each individual policy will vary slightly on exactly what is covered so it’s best to discuss your business and liability risks with a broker.
For example if you’re a cybersecurity expert hired to beef up a company’s website and network security and hackers breach the firewall only a few weeks later errors and omissions insurance protects you if the client accuses you of negligence whether or not the breach was your fault.
How to find the best errors and omissions insurance coverage
Each profession will have different levels and types of risk when it comes to professional liability. Many insurance companies offer specialized options that are based on the needs of a certain industry or profession.
It’s important to find a balance between your budget and the quality of coverage that ensures you and your business are protected. Thecheapest rate isn’t always the best option.
Discussing the liability risks of your business and industry withan experienced commercial brokeris your best option. They will know which insurance companies offer coverage best suited to your individual profession. Ask questions and ensure you understand what is covered and what is excluded. It’s also important to understand the process if you are sued and what you need to do. Remember that your broker is always there to answer your questions before during and after purchasing a policy.