Should you have E&O insurance?
Professional liability insurance, called errors and omissions or sometimes malpractice insurance, covers professionals who offer advice or professional services, such as doctors, lawyers, architects and accountants, from financial losses due to negligence.
It differs from commercial general liability insurance in that it covers costs associated with a claim or lawsuit that is the result of a mistake (an error) or something you failed to do (an omission) that causes financial losses or other damages. Commercial general liability typically covers personal injury or property damage.
Whether or not you you are at fault, the costs associated with lawsuits can be very time-consuming and costly. Determining whether you need this coverage depends on your industry, your clients, your contracts and the potential for harm. For some professional practices, such as medical professionals, because the potential for harm (and lawsuits) is significant, errors and omissions insurance is required by state law or workplace policy.
For other businesses, however, the decision is up to the business owner and their view of the potential risks versus the cost of obtaining errors and omissions insurance. Here are a few things to consider when deciding about E&O insurance.
Contractual Requirements-- Is it common in your industry for clients to require you to supply proof of insurance in order to secure contracts? This is common practice in industries in which your actions could result in significant financial losses.
Cost Feasibility-- Does the benefit of having coverage outweigh the cost of the insurance? In some cases, if the work you do places you at low risk, it may be that the cost of the insurance is more than you would earn from the contract.
Potential for Claims-- What is the likelihood that your professional services will cause harm or that a client would perceive that they had been harmed? For example, a mistake made by a doctor, lawyer or architect could have significant financial implications, making it prudent for professionals in industries like those to protect themselves with E&O insurance.
If you need help deciding if you or your business need Professional Liability Insurance / Errors & Omissions Coverage just give Joe a call at Taylor & Associates Insurance in Lewisburg, OH.
937-962-2123 X213 JBinkely@TaylorAGY.com