PROFESSIONAL LIABILITY INSURANCE A.K.A (ERRORS & OMISSIONS INSURANCE)
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Errors and omissions insurance also known as liability insurance for professionals is a very specific type of insurance which is crafted to protect individuals or businesses in the event they get sued for causing losses as a result of their operations . You may think that I will just call a broker, tell how much coverage I need, and that’s it. Fortunately, believe me, fortunately, we make sure we dig a few layers deeper before we provide you any insurance. Demanding quotes for a specific profession without doing detailed underwriting is as absurd as an accountant will doing taxes based on only giving him your gross revenues, an engineer consulting based on opinions, and some brokers who actually bind coverages without caring about their clients.
If you find yourself suffering as a result of an inadequate E&O policy, the blame is only on you. Most businesses that end up paying from their own pocket for claims are usually, in my opinion, individuals who compromise coverage to save a few $. At errorsandomissions.ca, we sell policies that will protect you, not just save you money. If you are a very price sensitive customer, we are probably not a good match for you. Our rates are not high, they are similar to our competitors but we will under no circumstances add exclusions to your policy to make your premium cheaper knowing we are taking away necessary coverages. Some brokers do this, we do not. There is a reason why we have insured and retained over 10,000 professionals since 1981.
It is entirely impossible to be able to predict the future. As a business owner in the Ontario area, you never really know when things are going to go against the grain. Nonetheless, it is possible to take steps to protect yourself in the event of a potentially devastating calamity. In fact, it is your duty to protect your company, employees, and your family! One way to provide yourself with a little shelter is by investing in errors and omissions insurance. This insurance is specifically designed to protect business owners like yourself from lawsuits stemming from neglect, errors or simply failing to perform up to standard.
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Accountants Actuaries Advertising Alternative Energy Architects & Engineers Architectural/Engineering technicians and technologists Appraisers Bookkeepers Broadcasters Building Designers Business Consultant Chiropodists Civil engineers Collection Agencies Consultants Contractors for all specializations Chiropractors Directors and Officers Easyline Employment Agencies/Recruiters Engineers Environmental Engineers Energy Audits & Assessments Foreign Legal Consultants Holistic Professional Home Inspectors Information Technology Immigration Consultants Interior Designers IT Contractor IT Specialist/Technician/Programmer Independent Contractor Product Designers Professionals Liability Professional Organizer Lawyer’s Excess Professional Liability Management Consultants
Medical Related Medical Professionals (Malpractice Insurance) Medical Students (Malpractice Insurance) Multimedia designers Mortgage Brokers Neuropathology New Media Occupational Health and Safety Consultants Quality Control Consultants Placement Agencies Podiatric Process Servers Private Investigators Project Managers Property Managers Paralegals Publishers and Printers Recruitment and Employment Agency Recruitment Consultants Safety Engineers Service Organizations Solar & Wind Farm Engineers & Consultants Structural Engineers Sub Contractor Surveyors Therapist Professionals Traditional Chinese Medicine Fitness Trainers Travel Agencies Travel Agents, Tour operators Excess & Umbrella Liability Web-Site Designers Workplace Engineers & Consultants
Within this in-depth informational guide, you will learn all about E&O insurance and the protection it will provide to your business.
The Definition Of E&O Insurance
To gain better insight into errors and omissions insurance, you should familiarize yourself with the basic concept of the insurance. As the name implies, this specific type of insurance product is specifically designed to protect your business from errors and omissions. The insurance can be used by a wide variety of professionals in the Ontario area. This includes web developers, real estate brokers, attorneys, business administrators, quality control experts, and everything in between.
The intention of the insurance is to protect your business from lawsuits, in which a mistake has led to financial harm to a client. Truly, this type of problem can become present in almost any type of profession. Take note that E&O insurance is different from malpractice insurance. The differences between these two types of insurance products will be explored in greater detail below.
If you are still unclear, below you will find a video by Geoff Gordon explain what E&O insurance is in very clear and simple language.
Differences Between E&O Insurance And Malpractice Insurance
When it comes down to it, E&O insurance is nearly identical to malpractice insurance. However, there are a few minor differences that will set them apart from one another. In all likelihood, you’ve heard of malpractice insurance at some point or another. This type of insurance is commonly attributed to medical professionals, such as doctors and dentists. E&O insurance is used by other professionals, including stock brokers, accountants, engineers, and lawyers.
The malpractice insurance will protect the doctor in the event of a medical error. E&O insurance protects the professional should the client lose money, due to an error on the professional’s behalf.
Few expenses that E&O Insurance may cover
While the insurance products offered by Aviva, Lloyds of London and Intact Insurance will be somewhat different, they will also be very similar. All errors and omissions insurance policies will cover at least three costs. These costs will be listed below.
Court costs – This will include attorney’s fees and any court costs associated with defending your company.
Settlements – If the court awards money to the complainant, you will be required to pay that money one way or another. Your E&O insurance can be used for this precise purpose. The insurance will also cover settlements that are made outside of the courtroom.
Daily allowance – While defending your company in the courtroom, you will be unable to focus on your regular business activities. Your E&O insurance will most likely provide you with a daily allowance for each day you’re required in the courtroom.
Without insurance, you would be forced to pay these costs out of pocket and that can be detrimental to your business. The insurance will give you the ability to avoid paying out of pocket, while also increasing the likelihood that your company will live to fight another day.
What Acts Are Not Covered?
While E&O insurance is fairly versatile, it is not a miracle solution to each and every one of the problems your business will face. There are certain acts that will fall outside of the scope of errors and omissions insurance. For starters, it is pertinent to realize that this insurance will not cover bodily injuries or harm caused by you or your employees. At the same time, this insurance will not offer any protection for damaged property. The insurance will not protect you, if you’ve did something nefarious intentionally. Malicious and illegal actions are not covered.
Finally, E&O insurance does not offer protection to companies being sued by their business colleagues or associates. You will need additional coverage in order to protect yourself from these acts.
When Should You Acquire E&O Insurance?
A lot of business owners will be a little hesitant to invest in E&O insurance, since the costs can be somewhat substantial. Nonetheless, by weighing the pros and cons, you will quickly realize that getting covered is well worth it! So, when should you obtain this type of coverage? The answer is simple. E&O insurance should be acquired as soon as humanely possible. Working with a single customer can be a risk. If that individual files suit against your company and your company is not protected, you’re going to be in big trouble. In fact, you might even be forced into bankruptcy.
With this in mind, you should obtain E&O insurance before offering your services to anyone!
What Documents Might Be Required?
It should be known that each insurance provider is unique. When attempting to submit an application with Premier Marine, you may be required to submit one or two documents. When signing up with Intact Insurance, you may need even more paperwork. In order to ensure that you’re able to get covered as quickly as possible, it is best to collect as much paperwork as possible. Generally, you will be required to submit the following documents.
Standard documentation procedures
Again, you may be asked for more information, but this will depend on the insurance provider you choose.
Getting Price Quotes
One of the biggest obstacles stopping business owners from getting covered is the overall cost of E&O insurance. Errors and omissions insurance will never be free, but it is possible to take steps to get a much lower monthly bill. First and foremost, you should take the time to consult with the insurance providers within the Ontario area. They’re plentiful and the added competition will encourage these companies to offer competitive pricing. Get quotes from as many companies as possible. While you’re at it, you may want to consider consulting with professional and trade organizations in your respective field.
In some cases, these entities may be able to help you obtain better prices. Just remember that the lowest price isn’t always the best. You need to find a middle ground between low cost and maximum protection.
Who Needs Errors And Omissions Coverage?
While most professionals are aware of the importance of errors and omissions insurance, others have never heard of it before. For those just graduating from college and considering starting a business, it is crucial to do research on available insurance policies and the risks they prevent. Every up and coming professional will soon find out that there are many risks pertaining to their career. These risks can potentially cost you your business, reputation and personal assets. Instead of taking these risks, you should definitely consider obtaining errors and omissions coverage.
Who needs errors and omissions insurance coverage? Well, the answer is simple, every professional service provider and business owner. It does not matter, if you just give regular advice or offer professional services to consumers, you will need to obtain coverage. If your clients require you to have E&O insurance coverage, you will need to obtain it, before initiating any services to the public.
If you are a professional, employed for a large corporation, you also face the same risks as any other professional service provider. Most companies do not offer this benefit to their employees, so it will be up to you to obtain coverage. As a professional, you are held to a higher standard of accountability and duty than average employees. If a client claims a monetary loss due to an error and omission on your part, you may be found liable in an Ontario court of law.
Obtaining protection from these risks should be your main priority and if you value all the hard work you have put into your business, you will not procrastinate, even for one minutes. Many professionals are not aware of the fact that E&O offers coverage way beyond the scope of the traditional general liability policy.
This list consists of only a few professional fields, so just because the field you are employed in is not listed, does exempt you from needing to obtain E&O insurance coverage.
Criminal Prosecution Not Covered
Errors and omissions insurance does cover defense costs, even when the legal action turns out to be groundless. However, it does not cover criminal prosecution, when a professional is accused of breaking the law. When someone is accused of committing a crime, they will end up in a criminal court trying to prove their innocence. The criminal procedure can be drawn out for months or even years, depending on the violation, judge and prosecutors. If the defendant is found guilty, they could face imprisonment for more than one year.
The errors and omissions coverage basically focuses on a client’s financial loss, alleged failure to perform on the part of the client and error or omission in products sold or services provided by the professional (policyholder). When a client faces an issue that pertains to the services or products you provide to the public, a negligence claim will be filed. Some professionals that find themselves in this predicament will immediately settle out of court, because they do not want their name dragged through the mud. However, this is not always possible, because the client may have experienced damages, with a high monetary loss.
If the case cannot be settled out of court, both the client and professional will end up battling it out in a court of law. The professional or defendant, if covered under an active errors and omissions policy will be able to choose an attorney of their choice, with the costs being picked up by the insurer.
When A Client Wants You To Obtain E&O Coverage
Consumers that are expecting to spend a lot of money on a specific product or service will expect to be protected from financial loss. In this instance, the client will request the professional to obtain errors and omissions coverage, because they are not willing to take these risks. You must put yourself in the client’s position and consider all the risks that pertains to the service you provide or the products you sale.
Mistakes can happen without you even being aware of it up until the moment the product is tested. For example, a software developer creates a high-tech application, spending months writing codes and putting everything together. The developer thinks everything is going great until it comes time to test the end product. The testing fails and the client is left feeling hopeless, with a lot of financial loss.
The issue could be linked to bad codes, which means that the developer will not be able to deliver the project by the guaranteed deadline. Of course, the software developer will most likely be adamant about rewriting the codes, but this means that the entire project will need to be delayed for an extended period of time.
If the client is not willing to wait it out another six to eight months, a negligence claim will be filed and chances are, you will be pushed into a major civil lawsuit. If only you had obtained errors and omissions coverage prior to the initiation of the project, you would have been able to settle or resolve the lawsuit out of court.
Your Company’s Level Of Risk
It is undeniably true that all companies in Ontario will face some degree of risk. Therefore, it is wise for all businesses to obtain E&O insurance. Nonetheless, it is also true that some businesses will face greater risks than others. For instance, companies that specialize in training will face much lower risks than stock brokers and accountants. At the same time, it is important to remember that the costs associated with a lawsuit will generally vary from one field to the next. Before acquiring insurance, you should take the time to evaluate the level of risk that your business will face.
If you work in a high-risk field, you would be wise to invest in additional coverage. An insurance agent will be able to provide you with additional information about your field and the number of lawsuits similar professionals will be likely to face. Be careful and make sure all of your company’s risks will be covered by your insurance policy.
Acquiring Peace Of Mind
When it comes down to it, there is a possibility that your company will never be hit with a lawsuit. In fact, you may go through your entire professional career without facing any problems whatsoever. Nonetheless, the risks will always linger in the back of your mind. You should also realize how devastating it would be, if your company faced a lawsuit without errors and omissions insurance. You would be required to pay out of pocket to protect your company. The problem would worsen severely, if your company lost and was forced to pay the client a substantial fee.
This would put yourself, your family and your employees at risk. Therefore, you should realize that a big reason for obtaining E&O insurance is to protect yourself and these individuals with peace of mind. Spend as much as absolutely necessary to put your mind at ease. This will allow you to focus on serving your clients, without having to second guess all of your decisions.
Read The Wording Carefully
Errors and omissions insurance is fairly complex. You will find this out firsthand when you take the time to read your insurance documentation. Each insurance provider will come up with a different contract and the wording will differ from one business to the next. This is why it is often a good idea to work with a policy writer that is thoroughly familiar with your respective field. When reading through your documentation, you’ll want to make sure the wording is correct and all of your company’s services are covered. If you want to make sure your policy will prove to be effective, you may want to consider paying to have a lawyer look at it.
In some situations, you may be able to add more coverage for little to no cost. Therefore, it is best to ensure you have the more comprehensive policy humanely possible.
Protection For Prior Acts?
Have you served clients before obtaining E&O insurance? This can be very risky! When signing up for your insurance policy, you may be able to cover acts that happened prior to your company getting covered. In general, a lot of policies will only protect your business during the coverage window. However, if you negotiate with the insurance provider, you may be able to obtain coverage for events that occurred before the coverage was initiated. Just remember that it is impossible to obtain insurance after the lawsuit has already been filed.
Therefore, it is pertinent to get the appropriate insurance coverage as soon as possible or you may regret it in the near future.
By working with several insurance providers, you will be able to obtain costs and policy coverages for several potential policies. To ensure you’re able to get the best coverage at the right price, you should compare the policies extensively. Make sure that you choose a policy that will cover all of your company’s needs. Also, it is absolutely essential to make sure that your policy’s coverage limits are suitable for your business.