by Benjamin Moss
Having Insurance To Protect Your Business When Mistakes Are Made.
Most of us have auto liability insurance, but a different type of insurance is referred to as errors and omissions insurance. This program is for business and specialty professionals, to safeguard them against claims for negligence created by their clientele. An error or omission is just a mistake that causes financial harm, and mistakes can occur on almost any transaction that develops in any profession.
In case your company is held responsible for a mistake that caused a customer to give up money, the policy generally covers settlements along with other costs. The allegations may end up being groundless, but it might take 1000s of dollars to defend a lawsuit. This might bankrupt smaller companies not insured. Medical professionals label this malpractice insurance, yet others refer to it as professional liability insurance.
Who exactly must get an errors and omissions insurance policy? Professionals that immediately come to mind include lawyers, doctors, architects, accountants and financial consultants. Essentially, if you give a service to a client for a fee, you might need the insurance policy. The list could go on and on to include personal trainers, computer technicians, marriage counselors, insurance agents, home inspectors and appraisers.
In addition to individuals, small businesses and other companies ought to have the insurance. A start-up business particularly could benefit from the E&O insurance. If an accounting error harms a customer, the insurance plan covers almost all of the legal defense. It also helps a new business develop a good insurance credit rating with all the major carriers. This helps secure more coverage in the foreseeable future.
Most experts recommend that errors and omissions insurance be contained in the insurance portfolio of every business. In reality, the coverage needs to be purchased before any business is carried out. It actually makes a good selling point with clients, because they know compensation is available in case there is some type of mistake in their transaction that eventually ends up harming them financially.
Many of these policies are written having a retroactive date. This is important, because if a claim is made due to actions that occurred prior to the retroactive date you will not be covered. Claims must be made and reported in your policy period for the insurance to kick in. The insurance plan is typically purchased separately from a usual commercial liability policy.
Why should a business have errors and omissions insurance? The reason is simple -- everyone makes mistakes. For example, if a time sensitive shipment is sent to Austria instead of Australia, it may cost a client hundreds of thousands of dollars. Someone must pay out for the loss, and that's just what the insurance will do.
Another example illustrating the requirement for an E&O policy has to do with a wedding. If the planner reserves the venue, caterers and band for June 22 instead of June 29, everyone will show up except the bride and groom with their guests. Someone will have to pay for this too. The insurance policy sounds like a great idea now!
When purchasing a <a href="https://www.frea.com/members/home-inspectors">home inspector liability</a> E&O policy, it's essential to pay close attention to what the policy provides. It is equally essential to know what the <a href="http://www.frea.com">professional errors and omissions insurance</a> insurance policy excludes. Optional coverage's available include WDI/WDO and Corporate Coverage. Radon is automatically included at no additional charge.
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