Errors and Omissions Insurance

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Errors and Omissions insurance for Florida small businesses

Small businesses are the backbone of Florida’s economy. According to data from the U.S. Small Business Administration Office of Advocacy, the Sunshine State is home to 3 million small businesses that make up 99.8% of all businesses in the state. Importantly, these small businesses added over 972,118 new jobs to the Florida economy in 2022.

The top five industries for small businesses in Florida are:

  1. Accommodation and Food Service
  2. Health Care and Social Assistance
  3. Construction
  4. Professional, Scientific, and Technical Services
  5. Retail Trade

No matter what industry you work in, having a safety net in place can help protect your business against the unique risks you may face. Errors and Omissions (E&O) insurance could help safeguard your enterprise’s finances and your professional reputation.

What is Errors and Omissions insurance?

Nothing turns your world upside down like the fateful words “you have been served”. A lawsuit is every small business’s worst nightmare. It potentially means damage to your professional reputation, having to pull away from day-to-day operations while you deal with the lawsuit, and lots and lots of legal expenses.

So how can you protect yourself and your business?

Errors and Omissions insurance (also known as Professional Liability insurance in Florida) is a type of policy that protects your business against claims of negligence, misrepresentations, or mistakes. E&O and Professional Liability claims are typically made by clients who allege some form of financial damage as a result of your services, products or employees.

Even if you have years of industry experience, there is always a chance that you might make a mistake in your professional capacity. Ultimately a small error has the potential to negatively impact your company in a big way, both your business finances and business reputation.

For example, a client may allege you delivered a professional service that caused them personal or financial damage. As a result, the client initiates a liability lawsuit against your business. In this scenario, an Errors and Omissions or Professional Liability insurance policy will help you cover the expenses incurred while defending your business.

What does Errors and Omissions Insurance cover?

E&O and Professional Liability insurance in Florida helps protect small businesses against common forms of liability claims, including:

  • Error or Mistake
  • Omission
  • Missed deadlines
  • Undelivered services
  • Negligence
  • Breach of contract

A policy helps protect businesses by paying legal defense expenses resulting from liability lawsuits. This generally includes items such as attorney’s fees, underwriting and documentation charges, court fees, and other administrative costs associated with defending your business. It may also cover any settlements and judgements that you are ordered to pay.

These lawsuits can be financially devastating for small businesses. Without E&O insurance, you would be left to pay these expenses from your own pocket. This could easily lead to bankruptcy or business closure, and could even mean using your personal savings to pay legal costs.

Liability lawsuits can be expensive. However, even a false or baseless claim can be financially devastating for small businesses. This is why E&O and Professional Liability insurance in Florida provide coverage for both actual and false claims.

Claims example

Here’s an example of how E&O insurance works:

An architect designs a new school, but is unaware that the accessibility requirements for schools have recently changed and are now different from other public buildings. The architect must appear in court after the school is cited for code violations.

Professional liability insurance protects architects against claims of negligence, even if they haven’t made a mistake.

What is not covered?

It’s important to understand that E&O and Professional Liability insurance in Florida does not protect businesses from all the potential risks they may face. The following items are NOT covered by Errors and Omissions insurance:

  • Intentional malpractice
  • Fraud and dishonesty
  • Illegal acts
  • Known claims and circumstances
  • Property damage
  • Workplace injuries and serious illness

Other forms of insurance coverage are available to help provide more comprehensive protection for your small business. You might also consider General Liability, Workers’ Compensation, or a Business Owner’s Policy.

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Who needs Errors and Omissions insurance?

Many different types of professionals may need E&O insurance to guard their financial resources and hard-won reputations from the risk of a liability claim.

Attorneys, accountants, consultants, and dozens of other Florida business owners keep E&O insurance in their portfolio as a way to safeguard their reputation, business assets, and profitability from the exorbitant costs of litigation.

Professions that often utilize Errors and Omissions insurance are:

ArchitectsNotary Publics 
ConsultantsReal Estate Agents
Engineers Publishers
Home Care Providers and BusinessesAccountant

Are businesses required to have Errors and Omissions insurance in Florida?

E&O or Professional Liability insurance in Florida is not legally required. However, there are situations where you may still need to have a policy.

If you belong to a professional association, check their insurance requirements for members (if any). They may mandate minimum levels of coverage to work in the industry or to obtain and renew licenses.

Clients may also require you to have insurance coverage in place before you can work for them. This obligation will likely be written into a business contract, and you may be asked to provide proof of insurance before work begins.

Even if you are not required to have E&O or Professional Liability insurance, your customers may still expect you to have a policy. E&O insurance can be an important signal that you are professional and value your business reputation. Customers might feel more confident working with you knowing that you take your professional reputation seriously and are ready to defend it, if necessary.

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How much does Errors and Omissions insurance cost in Florida?

The pricing for Errors and Omissions coverage is determined by a range of different factors and is, ultimately, unique to each business. In Florida, the cost of Errors and Omissions insurance is approximately $855 per year. Receiving quotes from multiple insurers is a reliable way to understand how much you can expect to pay for a policy that meets your business’ specific needs.

The following aspects of your business will influence your Errors and Omissions insurance premium:

  • Type of occupation or industry you work in – Some professions and industries present more risks to insurers than others. Insurance premiums will reflect these differences in risk.
  • Annual revenue – Handling large, complicated, and costly projects can increase the risk of making a mistake that results in a lawsuit. Insurers will take this into consideration when setting premium amounts.
  • Staff size – More employees working on projects increases the potential for mistake, and this will likely be reflected in the premiums you pay.
  • Employee licensing and experience – Employees with less experience or without the proper licensing can create more risk for your business.
  • Past claims history and risk management procedures – A history of liability claims signals to insurers that your business may be risky to insure in the future. A robust risk management plan could positively affect your premiums.
  • The liability limits you select – The higher the protection purchased, the more you can expect to pay for your policy.

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