What is errors and omissions insurance
Protect Yourself Against Inevitable “Oops” with Errors and Omissions Insurance
No matter how careful, experienced and professional you are, you’re human – and humans make mistakes. When it comes to doing business, mistakes can be costly both to you and your clients. That’s why every business owner needs to consider purchasing an errors and omissions insurance policy.
Why you need errors and omissions insurance
Errors and omissions insurance covers the cost of an honest mistake made that financially or otherwise damages your client. A few examples of incidents errors and omissions insurance would cover include:
- A tax accountant makes an error that causes a client to have to pay a penalty to the IRS
- A missed deadline causes your client to lose money on a project
- A plumber installs new pipes into a home, and an inefficient seal leads to a leak that floods the client’s basement
- A real estate agent forgets to disclose something about a property and is sued by the home buyer for negligence
- A marketing company gives a client advice, and that advice causes the client to lose customers and, therefore, revenue
In any of these cases, and thousands of other instances like these, you could be held liable for damages your mistake caused your client. Without errors and omissions insurance, you could find yourself paying out of pocket for these damages, which, depending on your business, could be hundreds of thousands of dollars or more.
Errors and omissions insurance covers your entire business
When you purchase an errors and omission policy, it covers all employees of your business as well as sub-contractors. This provides peace of mind to business owners because, although you may have a strict vetting process for new hires, there are no guarantees that someone new to do the job will be as dependable as you’d hoped. With an errors and omissions policy, you can rest easy knowing that if your new hire, intern, or sub-contractor makes a mistake, you won’t be the one left paying for it.
Errors and omissions insurance covers more than just claims
When you are sued by a client for negligence, there are more costs to consider than the judgment itself. Fortunately, errors and omissions insurance covers those costs as well, including attorney fees, court costs, and out-of-court settlements, up to the limits of your policy.
Retroactive policy dates protect prior work
If you’re considering purchasing an errors and omissions policy for your business, check to see if the companies you are considering can set the policy start date retroactively. This way, you’ll be covered for work you’ve done in the past if problems should arise.
How much does errors and commission insurance cost?
The cost of errors and omission insurance will depend on factors such as what industry you’re in, the likelihood that you may have to file a claim, how expensive those claims could be, and if you’ve had any judgments against you or your company in the past. As a rule of thumb, errors and omissions insurance typically costs between $500 to $1,000 per year per employee, though costs can vary.
Want to know more about errors and omissions insurance?
The insurance experts at Edwards Insurance Agency in Taylors, SC, help business owners all over South Carolina and the Southeast protect their businesses from expensive lawsuits with errors and omissions insurance. Give us a call today – we’d be happy to help!