How Professional Liability Insurance Helps After Mistakes
All businesses need liability insurance. However, many need more coverage than that which covers bodily injuries or property damage. It might be time for you to invest in a professional liability insurance policy, often called errors & omissions (E&O) insurance. This coverage provides financial assistance for mistakes you make in your line of work.
Errors & Omissions policies can help professionals in numerous industries. However, in its purest form, it applies when you make mistakes or give advice that harms others. Your policy can assist you with the costs of compensating these parties for these losses.
What’s An Errors & Omissions Policy?
In every business, there are risks that could threaten your clients, visitors, vendors or partners. These are both physical and personal.
One of these physical threats might be a leaking faucet, which could cause someone to fall and hurt themselves. Or, it could be the damage you might cause to someone’s home when you visit their property to make repairs, but wind up making a bigger mess. To cover these losses, you might turn to your general liability insurance.
The personal threats present in your business can be equally threatening as the physical ones just mentioned. Yet, they might not have coverage under general liability. Rather, you might have to use a professional liability policy.
Some of your professional liabilities might include mistakes you make when providing a professional service. For example, if you give advice to a client which doesn’t work out as you’d hoped, they could sustain personal harm (both physical or financial). This could be as costly to them as any physical threat like a leaky faucet.
The affected party might blame your business for these mistakes, and some will even sue you for the losses. By filing a claim against your E&O policy, you can receive coverage for the losses you’ll have to shoulder. You therefore can afford to recover from such losses.
When E&O Coverage Will Help You
Suppose that you are a certified public accountant — a CPA. Think about some of the risks that might occur in your office. Sure, there’s that leaky water fountain that poses a slip-and-fall risk. However, there’s also a chance that you or one of your employees might accidentally make a mistake while preparing another business’ tax filings. This could cause that business significant headaches and cost them a lot of money that they wouldn’t have had to pay otherwise.
As a result, the business might hold your CPA office responsible for their losses and expect you to pay up. They could sue you for the costs they sustained. If you can file a claim against your E&O policy, you might be able to get help with the recovery. Even if this mistake was an accident, it was still your fault, which is why you might have to compensate the client. E&O policies exist explicitly to protect you when such mistakes occur.
All Industries Need Coverage
Professional liability coverage is essential coverage for many professional service industries. Lawyers, CPAs, architects, insurance agents and various consultants might all need this coverage. Most doctors do as well. In fact, medical malpractice insurance is a type of E&O policy.
However, E&O policies can provide beneficial protection for almost any industry. Even such professionals as carpenters, plumbers and repairmen might be able to use this coverage. It can help them when they make mistakes in their line of work that subsequently cause harm to others.