Three Mistakes Businesses Make About E & O Insurance

Every business needs e & o insurance. People who automatically fastener their seatbelt before they start the vehicle joyfully go through life without this wonderful protection because they lack valuable information. Business owners believe lawsuits are only filed when a mistake happens or that they are protected from mistakes under their general insurance policy. Sometimes businesses have this insurance or think they do. Once people understand that errors and omissions insurance lets businesses keep operating while professionals handle legal issues, they will gladly invest in this protection.

The belief that lawsuits are the result of a mistake or a problem is false. As many lawsuits are filed over an allegation of negligence or from the fruitful imagination of an opportunist looking for easy money, everyone and anyone can be a target. Whether the lawsuit is justified or frivolous, the cost to defend or settle the suit is expensive. Lawyers invest hundreds of billable hours in getting the facts, taking depositions and filing legal documents. Although most e & o policies provide money for defense attorneys, the real value is in the quality of attorneys these insurance companies hire. These are specialists in the industry with a clear understanding of the law working for the insured and insurance company.

Regular business liability insurance does not cover e & o issues. When a business owner or employee makes a mistake, there is no insurance to cover the cost of fixing it. A florist shop may send wedding flowers to a funeral. An auto repair facility uses the wrong part. An electrician does not install lights in a room. An accountant missed the tax deadlines. A doctor amputates the wrong leg. An attorney forgets a filing date. All these businesses or people are uninsured and will be expected to fix the mistake or reimburse people for actual expenses, pain and suffering. This could be extremely expensive.

Each e & o policy needs to fit the industry and business. A careful review of existing policies by an experienced agent familiar with that industry will alert policyholders to potential problems. For example if a real estate company also manages the owner's rental properties, the policy may not cover property management and the claim from a tenant who suffered injuries. An insurance agent familiar with the industry can help companies customize this policy to their method of operation.

E & o insurance is a valuable protection allowing people and businesses to continue operating when something happens. Legal problems can come at any time and mistakes and negligence are not covered under any other business insurance. As each business operates differently, periodically reviewing existing errors and omissions policies to make sure these cover current business operations guarantees this coverage is available when it is needed.