Errors & Omissions Insurance Basics

Learning about the errors & omissions insurance basics will help you safeguard your company

When you understand the errors & omissions insurance basics it can help you protect your company in the event of losses associated with a customer lawsuit. Due to a considerable increase in customer lawsuits, many business owners have chosen to safeguard their assets with E&O insurance.

Typically, errors and omissions insurance is used by professionals and business owners who offer design solutions, provide professional advice, make educated suggestions or provide solutions to a range of customer needs. Examples of professionals who may benefit from errors and omissions insurance include real estate agents, notaries, teachers, inspectors and designers. Because this is not an exhaustive list, it’s a good idea to consider the following tips to help you learn the errors & omissions insurance basics.

1. Research how errors and omissions insurance works.

2. Evaluate the benefits of errors and omissions insurance coverage.

3. Learn how to obtain errors and omissions insurance quotes.

Assess the benefits of business errors and omissions insurance

Regardless of the products and services you provide, customers can claim that you committed a business error that cost them money or caused them harm. The costs to defend such claims can be considerably high. Errors & omissions insurance policies will cover many of the court costs associated with defending this claim. The insurance will also cover any final judgments you are required to pay in the event you lose the case.

Learn more about the basic coverage offered by E&O insurance

The annual limit and claim limit of business errors and omissions insurance policies is typically based on the policyholder's exposure to liability. The claim limit of E&O insurance indicates the maximum amount that will be paid for any single occurrence and the annual amount is the maximum yearly payout. Generally, commercial errors and omissions insurance coverage limits will start at $250,000/$500,000, but you can set them as high as $2 million/$4 million.

Find errors and omissions insurance providers

You can obtain an errors and omissions insurance quote online. The cost of similar E&O insurance policies will vary among providers. To find a trusted and reliable E&O insurance provider, try contacting highly rated providers by searching A.M. Best and Standard and Poor's. You can also visit individual providers to see what type of products are available.

• Purchasing errors and omissions insurance is a critical factor in managing your business risk. However, there are other strategies you can use to further decrease your exposure to lawsuits. These strategies include providing customers with a complaint line to allow them to directly and immediately communicate their frustrations with your service. Sometimes, this simple step can reduce the likelihood of a lawsuit while increasing your customer's satisfaction with how you conduct business.

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