Anything can happen when you run a small business. For some, a simple mistake could create complicated and expensive problems for their clients. And if a lawsuit is brought against them, these businesses may wish they had a safety net in place to help them get back on their feet.
Errors and Omissions insurance is one way to protect small businesses that provide professional services. This vital policy can help you prepare for common events, such as errors or missed deadlines, that could result in unexpected bills for your small business.
This quick guide discusses what E&O insurance is, who needs E&O insurance, and answers the question, “Is E&O insurance required by law?”.
What is E&O insurance?
Errors and Omission insurance protects your business against claims of negligence, misrepresentation or mistake, as well as document or paperwork errors. It is often shortened to E&O insurance or called Professional Liability insurance.
E&O insurance includes coverage for mistakes in your work, breaches of contract, professional negligence, and other types of professional wrongdoing. It helps cover the cost of an attorney, as well as settlements and judgements you are ordered to pay. Importantly, a policy provides protection against both claims made with or without merit.
Recommended reading: What is Errors and Omissions insurance?
Who needs E&O insurance?
Errors and Omissions insurance is an essential type of insurance coverage for many types of businesses. This includes occupations as diverse as accountants, home health providers, architects, and consultants, just to name a few.
Many professionals and small business owners are unsure if E&O insurance could help their businesses. In these cases, it’s often helpful to ask yourself these questions:
- Do you provide your clients with a professional service?
- Do you or your employees regularly give professional advice or recommendations to your clients?
- Do you or your employees regularly act on behalf of your clients and represent their interests?
If you answered yes to any of the above, you might want to consider an Errors and Omissions policy. The coverage it provides could prove valuable to your business by paying the costs associated with claims and lawsuits that could result from your work.
Is E&O insurance required by law?
Depending on your profession and where you work, Errors and Omissions insurance may be required by law. Your state or local government may require you to buy a policy to obtain a professional license. They may also set minimum coverage amounts for people in your profession. This is often the case for lawyers, medical professionals, and real estate agents, among others.
You may also be required to buy E&O insurance to join some professional associations. Similar to the requirements set by governments, you may need to keep a minimum level of coverage to remain a member.
Recommended reading: Errors and Omissions Insurance Requirements
Even if you do not need to be insured, either by law or to join a professional association, your clients might still expect it. They may require you to have a policy to work with them, particularly if you are a contractor or subcontractor. You may need to show proof of insurance before signing a business contract.
Where can you buy E&O insurance?
Many insurers offer Errors and Omissions insurance in the United States. Because prices can vary from one insurance company to the next, comparing quotes from different insurers could help you find coverage that suits your business needs and budget. While this used to be a time-consuming process, it’s now fast and easy with BizInsure.
In as little as 10 minutes, you can compare quotes from A-rated insurers online and buy a policy. The process is simple, with no complicated paperwork to fill out. You’ll even receive your policy documents direct to your inbox!
Compare E&O insurance quotes today and start protecting your professional services business.
The number of quotes provided varies between products, occupations and other underwriting factors determined by the insurers.
© Copyright 2022 BizInsure LLC, 2015 ALL RIGHTS RESERVED BizInsure LLC; CA DBA: Simple, Smart, BizInsure Insurance Agency LLC; NY DBA: BizInsure Services LLC; NH DBA: Simple, Smart, BizInsure Insurance Agency; PA DBA: BizInsure Services LLC. 2950 Buskirk Ave Suite 300, Walnut Creek, CA 94597. License #0H81929