Every once in a while someone within your organization might make a costly mistake. While it may be unintentional, the client that is affected is likely to sue, especially when it results in any loss of time or money as a result of the error. In some instances, they may be suing for things that were unavoidable. This is true when things are simply out of the control of the person attending to the needs of this particular person, but they may still demand to be compensated in a court of law.
This is why an Errors and omission policy (E&O) is so vital. It can help you during such a crisis. For example, someone in your office may be given the task of faxing important documents to a client. Unbeknownst to them, the fax doesn’t go through even though they assume it did. If this results in a late filing, or some other legal responsibility is not met, you’ll likely have to compensate the client for any penalties that are issued. No one can afford the added risk of reputational damage over lawsuits and claims of negligence.
Providing compensation is essential to your business reputation
Like most insurance coverage, an E&O policy makes perfect sense as a preventive measure against damages. Realize that one single mishap can conceivably cost your company a fortune. Isn’t it better to protect your business with a reasonable premium of coverage?
Having the right insurance policy can help when these types of allegations arise. This allows your staff to spend time concentrating on services rather than worrying about financial commitments and reputational loss.
Some exclusions of E&O Insurance
Certain things will not be covered by your Errors and omission policy. Any deliberate, fraudulent or criminal activities done by the business, bodily injury or property damage, any services rendered by a director or the officer of the company, or any liability related to workers compensation.
In addition, disciplinary damages, claims that arise from previously known but not disclosed errors, and services rendered as a government official are also not covered. There isn’t a standardized E&O insurance policy. Speak to an agent about a policy that covers you, as a professional, your family, employees and the business from damages for services rendered.