Having a general business liability policy does not guarantee a full protection against your business lawsuits. It goes as far as protecting you against physical acts such as customer being injured in a store or from a faulty products you sold. As a professional service provider, you are at risk of being sued if you make mistake that negatively affects a client. But there is a way of preventing these risks by having the errors and omissions insurance.
What is E & O?
Errors and omissions insurance, also known as E&O insurance, is a professional liability insurance that protects professionals such as lawyers, doctor and/or financial advisers against claims made by clients in an event that leads to financial loss, physical harm or loss of reputation for a client.
Who should have Errors and Omissions Insurance?
Errors and omissions insurance is targeted to any professional who provides services to businesses as well as individuals. Medical professionals are often required to carry a type of malpractice insurance. Some Canadians provinces, including Ontario, Quebec and Saskatchewan, require estate planners and financial consultants to have errors and omissions insurance.
Although carrying errors and omissions insurance is optional from a legal standpoint, it is a good idea to have it.
How to get E & O?
Companies that sell general business liability policies often offer errors and omissions insurance as well. If not, there are several agents who specialize in offering these services, especially if you live in a populated city.
Although several companies offer this policy along with your existing liability insurance, you may still be required to go through a separate underwriting process. Through this process, you will most likely be asked to provide copies of contracts as well any quality control or training policies you may already have, including your history of claims or lack thereof.
Rates for errors and omissions insurance not only depend on your personal situation, but also on the industry you work in. For example, an industry where mistakes are common and often lead to lawsuits, the premium rates will be higher, even if you have not been the target of a lawsuit.
Without errors and omissions insurance, there is a possibility of winding up in a financial straits over a mistake or the loss of a lawsuit. In a case like that, you will need a way to get debt relief or debt settlement.