Error and omissions insurance may be vitally important to your business if you are dealing with a large amount of data. This type of policy is also known as professional liability insurance which is primarily used by real estate agents and mortgage companies. Since these two industries deal with very large, legally binding documents it is important to have coverage in the case of an error or omission. A mistake can occur at any time which can expose the company to potential lawsuits and very large defense costs.
The amount of coverage you need depends on the amount of data you are dealing with. A basic policy will cover the institution’s defense costs but may not necessarily cover the amount of a potential award. It is important to understand that an institution dealing with smaller documents can generally police themselves and keep their exposure to risk at a minimum. Larger companies dealing with larger documents face the possibility of missing a mistake or omission and which could ultimately lead to a lawsuit. This scenario means the company must have the right amount of coverage to ensure they are fully protected.
Whether the mistake was fraudulent in nature or not, a standard policy must be in place in order to protect the company’s reputation. It is important to understand that if the company is found liable, and the omission was deemed fraudulent, the policy will not cover the award amount. Keeping these simple tips in mind will help you find the exact type of error and omissions insurance for your business.