The Benefits Of Errors And Omissions Insurance

by Pat Sims

It seems like more and more people are turning to litigation to deal with any problems that might come up between a client and a business. It doesn't matter how frivolous the claim, people seem determined to take a company to court and get some kind of compensation out of it. If this happens to you or your company, Errors and Omissions insurance can keep you protected.

Errors and Omissions insurance can protect individuals and companies from claims when your client or customer tries to hold you responsible for errors or for failure of the work to live up to what was stated in the contract. Contract performance disputes can be serious trouble for a company, but a good insurance program can keep you in business.

Insurance like this is applicable to almost any business, but it is perhaps most useful to companies in the service industry. Any company that offers a service for a fee is open to have the final quality of that service questioned. Without the tangible proof of a finished product, many clients will turn to litigation when they feel they are not getting the full value for their money.

One can think of Errors and Omissions insurance as a policy that is very similar to malpractice insurance. The fact is that sometimes things go wrong in both the service industry and the medical industry no matter how hard you try to avoid problems. And when the client seeks compensation for the error, this kind of insurance can be a lifesaver.

Sometimes there are circumstances that are just out of your control. No matter how hard you try to finish the task as it was outlined in the contract, something can pop up and prevent it from happening. It could be the poor performance of a single employee or a horrible accident on the job. It may not have been your fault, but that doesn't mean the customer won't try to seek some kind of compensation.

You can find a different Errors and Omissions insurance policy to fit your own individual needs, and you should make sure that the coverage is right for you. You might find that there are too many addendums and caveats, or they might be leaving out some intrinsic elements you need. Either way, take the time to understand a policy and make sure that it will properly protect you.

A good policy will cover any judgment against you as well as any legal or court fees that you might incur. Even if the claim is totally baseless and the judge rules in your favor, the costs of lawyers and legal fees can do significant damage to a company, so be sure the policy covers both areas. You should also be sure that the policy will cover full time, W2 employees as well as 1099 subcontractors.

Unfortunately, many companies forget about the benefits of Errors and Omissions insurance. They believe that since they haven't had any problems so far, they'll be fine in the future. But the fact is that it only takes one litigious customer to cause serious problems. The right policy, however, can help you avoid them all.