Business owners and professionals such as real estate brokers, architects, insurance agents and third party administrators need errors and omissions insurance. A simple error or omission in a business can have serious financial ramifications which may force the proprietor to close shop. This type of insurance covers the business owner from claims that may result when a customer or other third parties are injured physically or financially due to their mistakes.
E & O insurance is different from exclusions and coverages insurance. E & O insurance is meant to cover the cost of damages and defense costs in case of liability claims. Every business owner or professional should carry this type of cover since everyone makes mistakes.
While negligence is covered in this type of policy, fraud, intentional damages an other illegal activities are not covered because they are punitive damages. The plaintiff must be able to prove negligence on the defendant’s part in order to be compensated. Each errors and omissions insurance policy is exclusive and certain policies do not cover some claims. It is therefore important to read the fine print before signing up for any E & O insurance.
Any professional or business owner can be sued. Some claim can be malicious while other might be merited. In either case, having errors and omissions insurance will ensure that the financial standing of your business is not affected.
There are many factors which affect the cost of errors and omissions insurance, they include claims history, type of policy, annual revenues, number of professionals to be covered and the type of service being rendered by the professionals.
The best errors and omissions insurance is offered by providers who have specialized in E & O insurance only. You should also read online reviews and ask for references from family and friends.