Error omission insurance can provide protection for your business against legal costs incurred by legal action taken against you or your company. E & O insurance policies can be written with a wide range of limits of liability and are often written in million dollar increments. There may be a deductible amount associated with your E & O policy. However, whatever it is it will far outweigh the overall costs that could be incurred in a legal action.
Every error omission insurance policy will differ. The policy and premium will be partially based on the industry your business is in, the location you operate your business and the type of service or product your business provides. Whether or not your business is able to stay open after a lawsuit may depend on whether or not you had E & O coverage in place. Even a frivolous lawsuit it could cost you thousands of dollars to defend yourself.
Anticipating what might happen and taking precautions to protect your business is part of a good business plan. Having error omission insurance policy in place is part of preparing for the future just like property insurance and other types of liability insurance. After you have worked to establish your business as reputable it is hard to believe that someone would want to sue you. Unfortunately in today’s litigious society it’s often not a matter of if, but just a matter of when a lawsuit will happen.