In every business, there is a risk that your negligence might harm others. If it does, it could cause them various types of physical, financial or personal losses. In these cases, you might have to turn to your commercial liability insurance to compensate the third parties for their losses. However, depending on the type of mistakes you make, you might need special types of liability coverage to apply. One of these policies might be professional liability insurance, also called errors & omissions (E&O) insurance. Does your business need this coverage?
Nearly all businesses need liability insurance, and many need the additional protection offered E&O insurance. So, when setting up your portfolio, see if this coverage is right for you.
What’s E&O Insurance?
Liability insurance helps protect the business in case it causes harm to others, like clients. With coverage, the business can pay the affected parties back. Therefore, the client can receive compensation for their losses. The business also can avoid paying out of pocket for such mistakes. Indeed, if the third party sues the business, then coverage can help the business defend itself.
Errors & omissions insurance is a specific liability policy. It pays in case the business’s professional services or advice causes harm, usually financial harm, to the affected client. This is coverage that many professional businesses need.
Suppose that you are a lawyer. Clearly, your clients rely on you to help them make important decisions. Your advice, therefore, needs to be the correct guidance, to the best of your abilities. Should you make a mistake, it could cost your client a lot of money. They therefore might hold you responsible for their losses, and might even sue you.
In these situations, you might need an E&O policy to help you cover the costs. Even if a client’s claim is unfounded, then coverage can often help the policyholder.
What Businesses Need Coverage?
Ask yourself, does my business provide a service for a fee? In these cases, you might need E&O insurance. Some of those businesses might include:
- Lawyers, legal professionals
- Contractors
- Medical professionals (medical malpractice coverage)
- Accountants
You don’t have to provide only provide advice, you might also provide physical services. However, this also often involves giving advice, too. That’s why you might need an E&O policy. In essence, the coverage will protect you in cases where your standard general liability insurance won’t.