What is Errors and Omissions Insurance
According to the U.S. Small Business Administration, there are around 2.6 million small businesses in Texas and these small businesses makeup 99.8% of all businesses within the state. Small businesses that provide professional services or give advice to clients should consider purchasing Errors and Omissions Insurance in Texas.
Errors and omissions Insurance is commonly known as professional liability insurance. This is a special type of insurance policy that protects you and your company against third party lawsuits as a result of a professional error or negligence. Even if you have years of experience in the industry, there is still a chance that you might make a mistake in your professional capacity. And this error could have a big financial impact on your business.
Take for example you offered a professional service that did not suit your customer. They suffered personal and financial damages after using your offering. As a result, the customer initiates a lawsuit against your company. In such a situation, an Errors and Omissions Insurance policy can help you meet expenses incurred while defending your company.
What does Errors and Omissions Insurance cover
The following aspects are covered under Errors and Omissions Insurance in Texas:
- Actual or alleged negligence: The policy protects your business against both actual and alleged claims of errors and omissions that may have occurred while providing professional services.
- Legal and defence expenses: All legal expenses incurred while defending your company such as lawyers’ fees, documentation and underwriting charges, and administrative costs are covered by Errors and Omissions Insurance.
These aspects are NOT covered by Errors and Omissions Insurance in Texas:
- Illegal acts
- Intentional malpractice
- Known claims and circumstances
- Fraud and dishonesty
- Property damage
Who needs Errors and Omissions Insurance?
Professionals and businesses that provide professional services such as giving advice, making educated recommendations, designing solutions or representing the needs of others all have errors and omissions liability exposure. Errors and Omissions Insurance can safeguard your professional reputation, profitability, and business assets from the potentially astronomical expenses of litigation (whether justified or not).
Here are examples of professions that need Errors and Omissions Insurance:
|Consultants||Real Estate Agents|
|Home Care Providers and Businesses||Accountant|
How much does Errors and Omissions Insurance cost
The cost of Errors and Omissions Insurance is influenced by many factors; therefore, it is hard to predict the exact cost of your insurance. However, on average, the yearly cost of Errors and Omissions Insurance for small businesses in Texas is around $894.
The following factors might have an impact on your Errors and Omissions Insurance premium:
- The type of your occupation – some professions are inherently riskier than others from an insurance standpoint. The riskier the occupation, the higher the cost.
- Your business turnover and size – bigger sales mean that the company either undertakes larger projects or has more projects by volume. Both of these situations contribute to either a larger lawsuit or a higher risk of being sued.
- The amount of insurance coverage you require
- The individuals being covered – are they qualified for the job they are performing, and do they have a previous history of claims