What is E&O insurance?

Errors and Omissions (E&O) is insurance that covers you in the event that a client holds you responsible for a service you provided, or failed to provide, that did not have the expected or promised results. For doctors, dentists, chiropractors, etc., it is often called malpractice insurance. For lawyers, accountants, architects or engineers, it may be called professional liability. No matter the name, it covers you for errors that you have made or that your client perceives you have made.

Most E&O policies provide financial coverage judgments, settlements and defense costs. Even if the allegations are found to be groundless, it can cost thousands of dollar to defend a lawsuit.

Who needs E&O insurance?

If you are in the business of providing a service to a client for a fee, you have an E&O exposure. You may want to consider what will happen if the service is not done correctly or on time, and it costs your client money or harms their reputation. Generally speaking, E&O insurance covers you for professional mistakes that result in financial or physical harm to clients or customers.

A few examples of professionals that would benefit from E&O Insurance are: Realtors, who may have advised a client to purchase a home with defects, Writers, who may be subject to libel claims, or Attorneys, who may give bad legal advice that results in financial harm to a client.

Why does my company need coverage?

Everyone makes mistakes. Even with the best employees and the best risk management practices in place, mistakes will be made.

If an important delivery is sent to Austria instead of Australia and it is a time sensitive shipment that loses a client sale and, therefore, hundreds of thousands of dollars, who will pay the loss?

If a wedding planner plans a wedding for June 22 instead of June 23 and everyone shows up except the wedding party and guests, who pays? Imagine the emotional distress caused to the bride if this were to happen!

By not purchasing E&O a company can be taking a serious financial risk. These types of losses are not covered under a general liability policy. And, as stated earlier, even if you are not at fault, litigation is both time consuming and expensive.

What it covers

Typically, E&O insurance is based on a “claims-made” basis, that means that the policy is triggered when the claim is made, instead of when the accident or error actually occurred. As a result, it’s important to keep renewing your coverage if you want to make sure that you’re protected. Otherwise, you won’t be protected against a lawsuit from a client you last saw three years ago, even if you had coverage at the time.

E&O policies also carry limits on coverage — commonly, they cover up to $1 million, but the limits may be lower for cheaper plans.

The cost of E&O insurance may vary greatly depending on the class of business, location, and claims experience. It is important to work with a knowledgable agent to meet your small business needs.

Contact our experienced agents at LG Insurance Agency in Long Branch, NJ. We are your local Jersey Shore insurance agent, working for our clients to provide the best service possible!

 

All content provided in this blog is for informational purposes only. Topics discussed on this blog relate to insurance products and issues in a general application, and are not an offer of insurance, a guarantee of coverage, or applicable to specific and individual circumstances. Contact LG Insurance Agency for questions and information specific to your insurance needs.

About LG Insurance

Founded in 2009 by Aaron Levine, LG Insurance is one of the Jersey Shore's fastest growing insurance agencies. Located in Long Branch Jersey, LG Insurance proudly serves many other local towns throughout Monmouth County including Asbury Park, Eatontown, Little Silver, Middletown, Ocean Township, Red Bank, Rumson, Shrewsbury and all of NJ. We also insure homes and busiensses on Long Island and in the Greater New York City area.

Specializing in personal and business properties in coastal areas, LG Insurance offers a full product line of personal and commercial insurance packages and products as well as a full line of life insurance and supplemental insurance coverages. 

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