Making errors is just part of being human, either at workplace or in daily life activities. But there are certain clients who are pretty serious about every inch of their work. Even a slight mistake can make them claim for inadequate performance. These claims may seem small to the providing party, but can severely affect the financial position of a business and have the potential make them insolvent. In order to avoid such terrible consequences, companies get protection through an insurance policy and protect themselves from the consequences of claims.
Let’s have a look at why companies need an errors and omissions policy.
What is an E & O Policy?
Before we move on to why companies get themselves insured under this policy, you must first understand the ins and outs of the policy. This kind of coverage is for the businesses who want to protect themselves from the expensive claims holding them responsible for the poor services. The claims are different from every client, they can be due to the failure to meet client’s expectation of the services or may be due to not providing the services on time.
The insurance company is responsible to provide coverage for the losses incurred by the companies by defending and paying settlements or judgements. This policy helps put businesses in a secure position by knowing an unintentional error or mistake is not going to be catastrophic. Errors and omissions insurance policies is termed in different ways for every profession.
For instance, E & O policies are called ‘malpractice insurance’ for chiropractors, doctors, dentists. On the other hand, they are termed as ‘professional liability’ for engineers, lawyers, architects, and accountants. But the coverage is the same for all the professions. Technically, the errors and omissions insurance policy provides coverage against, settlements, judgments and defense costs.
Why Do You Need an E & O Policy?
We are neither a perfect as humans and business errors do take place. In fact mistakes do happen regardless of having the best team of employees and strategies for an organization. Being an employer, you never want to disappoint you’re clients. But there is a possibility that an aggrieved client can file a law suit no matter if the claims are groundless or they can be resolved in person. Also, you can end up paying thousands of dollars and potentially bankrupt.
Furthermore, your credibility and reliability in the market and your target audience may decline. Employers who are providing services at a significant fee will need errors and omissions insurance protection. This coverage suits many business professionals, doctors, engineers, certified public accountants, wedding planners marketing managers, and individual business owners. You must keep in mind that the cost of this policy depends upon the business type, location and how many times the company has been involved in claims.
Remember to get insurance for errors and omission insurance policy from a veteran and credible insurance company to avoid obstacles down the line.