We live in an age of lawsuits. Once upon a time, lawsuits were considered a last resort. Nowadays, they’re a common method of settling disputes. But fear not! You can protect yourself and your business with professional liability coverage, more commonly known as Errors & Omissions (E&O) Insurance.
With a supplemental E&O policy, you can strengthen your business owner’s insurance by insulating yourself from a devastating loss from a lawsuit due to an error, omission, or negligent act. Also, an E&O insurance policy protects against libel, slander, and breach of contract.
Who Needs E&O?
E&O is ideal for anyone who is in a position where they make informed recommendations, offer advice, design solutions, or represent others’ interests. Perfect candidates for carrying E&O include: accountants, software developers, architects, event planners, computer consultants, contractors, real estate agents, etc.
There are also more specialized forms of E&O coverage available for professions like appraisers, insurance agents, notaries, real estate agents, and home inspectors where large legal defense costs might be incurred while trying to prove liability or innocence. If the business owner loses the lawsuit, this coverage would also take care of the final judgment.
How Does E&O work?
Commercial General Liability insurance doesn’t cover liability issues, such as contract performance disputes, service errors, or other professional liability conflicts. This is where your E&O coverage comes into play. E&O also covers defense costs, which can often run high even if liability isn’t found.
The insured typically have both a claim limit and an annual limit based on their exposure. The claim limit represents the maxmimum amount that the insured can be paid for a single event. The annual limit represents the maximum amount that will be paid in any one year. Depending on the type of business, typical limits can range from about $250,000/$500,000 to $2 million/$4 million. Businesses are also usually required to have proof of licensure in their “covered class of business” in order to qualify for E&O.
Would you like to know more about the different kinds of professional liability insurance ERM Insurance Brokers offers?
Call our office in Irvine, CA to speak with a local expert! (949) 222-0444