Even for astute owners well studied when it comes to the various means of protection available for their business, the matter of insurance can be a confusing one. Some go into business, and into the process of seeking an insurance provider, believing that a standard liability policy is all they need as a company. You may wonder what distinguishes professional liability insurance from the seemingly endless other insurances out there. You may wonder how this type differs from what is known as Errors and Omissions (E&O) insurance.
Luckily, this is one common area of confusion that is easily straightened out when you buy professional liability protection. Errors and Omissions is simply an alternate title for professional liability insurance. If you have already begun the process of conducting research into this field, you have probably seen both names pop up repeatedly. In fact, you may find that one provider typically uses one title while the next provider seems to lean toward the other. The important thing in your research, and more so in committing to a certain provider, is to understand precisely what is meant by E&O.
Scenarios Covered by E&O
As its name would tend to imply, Errors and Omissions answers problems related specifically to real or alleged mistakes (errors) and neglect (or, omissions). While your company may have upheld high standards of manufacturing (or of council dispensing, for consultants) since its inception, there are plenty of things that can still go wrong. Strict quality standards are part and parcel of ensuring your business a solid reputation and avoiding legal trouble, but sometimes, unfortunately, such standards are not enough. When a consumer or client of yours brings up allegations that, owing to your product, he or she suffered a significant loss of funds, the financial burden to you can be similar whether or not there was genuine fault within your business.
Even when it comes to claims that are rejected in court, you may find yourself as the business owner investing substantial capital in a legal defense fund. Such costs can seem astronomical to small business owners, or even proprietors of larger businesses that are struggling to stay ahead in a difficult economical situation. Lawsuits hinged on claims of bad advice or a poorly functioning software program or other product have proved the ruination of companies previously. E&O insurance is tailored specifically to help keep your prized company financially safe in the face of such threats.
Who Needs this Insurance
While small business owners are primary candidates for E&O, or professional liability, insurance, there are many others who can benefit as well. Surprisingly to some, even certain charities may benefit from the protection of this valuable insurance type. It applies across a broad spectrum of profession types. If your company does not fall neatly within one of the standard categories of E&O insurance, you may want to speak with a licensed insurance agent to ensure you make the right decision for your company or charity.
Consultants, real estate brokers, appraisers, architects, and many more professional classifications can be covered by Errors and Omissions. Information technology (IT) providers will frequently benefit from E&O, and will be glad to find that policies for them include special provisions that answer the niche needs of their work dealings. While there is no real difference between professional liability insurance and Errors and Omissions, there are certainly differences among custom policies within this field. These differences are based on specific profession types and can be easily figured out with the help of seasoned insurance provider.