You ought to take errors & omissions insurance from a commercial insurer for many reasons. We’ll give you two:
Celmatix filed a $100 million lawsuit against 23andMe, a genetic testing company, for breach of contract in 2019.
In the same year, car rental company Hertz sued IT consultancy Accenture for $32 million over a website they failed to deliver.
Without errors & omissions insurance, these companies would either file for bankruptcy or face severe financial challenges, crippling their growth.
That’s why errors & omissions coverage is central to the survival of your service business.
WHAT’S ERRORS & OMISSIONS INSURANCE?
Errors and omissions insurance is a kind of professional liability insurance that safeguards businesses, their employees, and other professionals against claims of negligent actions or inadequate work.
It falls under liability insurance (others are general liability and employer liability insurance covers).
The type of businesses that take errors & omissions insurance offer professional services to customers for a fee. But if you run your service business from home, this is not necessarily a crucial protection for you.
The types of businesses that require such insurance include:
Advertising firms
Consulting companies
Engineering firms and engineers
Marketing firms
Pet services (pet groomers and veterinarians)
Hair salons and barbershops
Educators
Publishing and printing companies
Real estate companies
Interior design firms
Hospitals
WHAT CLAIMS DO ERRORS AND OMISSIONS INSURANCE COVER?
Even the most distinguished pros make mistakes, namely doctors, accountants, dentists, surgeons, and real estate agents.
These mistakes can cost an arm and a leg if you don’t have errors & omission coverage and a client sues your business for millions of dollars for errors performed against them.
In addition to mistakes, errors & omissions insurance covers failure to meet a deadline in the performance of service to a client, professional negligence, breach of contract, and failure to adhere to particular standards of care.
Examples of claims your business could face include the following:
A client sues your marketing agency due to wrong advice they got from your marketing consultant, causing them to lose money.
A client could file a claim against you if your accountant offered the wrong financial advice.
A customer files a claim against your public relations firm after your communications strategy backfires and their reputation dwindles.
A customer sues you for breach of contract because your interior designer used the wrong colors when repainting their house.
A home buyer files a claim against your real estate company for negligence because your real estate agent forgot to include crucial details about the home.
A client business sues your accounting firm because your tax accountant made a calculation mistake that resulted in the client paying the penalty.
No one is perfect, so take errors & commission insurance for longevity in your business.
ERRORS & OMISSIONS INSURANCE COST
Some factors impact the amount of insurance premiums paid.
High-risk industries pay higher premiums. Case in point, a financial consulting company that advises clients where to invest millions of dollars will pay more premiums than an interior design company on average.
Higher coverage limits increase the cost of the premiums since you will get greater coverage compared with a similar business that picks a lower coverage limit.
Do you have a lengthy claims history? If so, expect steep premium costs.
Businesses in busy cities pay more than those in the outskirts.
Expect to incur about $500 to $1000 per year per employee and more if you have a history of myriad litigation issues.
WHAT COSTS ARE COVERED?
If your business is sued for a costly oversight by a client, and the court finds you guilty, errors & omissions insurance will cover particular kinds of settlement. For example, if the plaintiff incurred costs because of your wrongdoing, the insurance cover would cover the costs.
In the case of legal costs and attorney fees, it doesn’t matter whether you’re found guilty or not; the insurance policy will cover the costs.
GET ADEQUATELY INSURED
You now have a clear picture regarding what your business stands to lose without errors & omission coverage.
That said, at Zupnick & Associates, we safeguard you from financially draining and head-spinning lawsuits, through comprehensive errors & omission insurance.
Get in touch today.
Celmatix filed a $100 million lawsuit against 23andMe, a genetic testing company, for breach of contract in 2019.
In the same year, car rental company Hertz sued IT consultancy Accenture for $32 million over a website they failed to deliver.
Without errors & omissions insurance, these companies would either file for bankruptcy or face severe financial challenges, crippling their growth.
That’s why errors & omissions coverage is central to the survival of your service business.
WHAT’S ERRORS & OMISSIONS INSURANCE?
Errors and omissions insurance is a kind of professional liability insurance that safeguards businesses, their employees, and other professionals against claims of negligent actions or inadequate work.
It falls under liability insurance (others are general liability and employer liability insurance covers).
The type of businesses that take errors & omissions insurance offer professional services to customers for a fee. But if you run your service business from home, this is not necessarily a crucial protection for you.
The types of businesses that require such insurance include:
Advertising firms
Consulting companies
Engineering firms and engineers
Marketing firms
Pet services (pet groomers and veterinarians)
Hair salons and barbershops
Educators
Publishing and printing companies
Real estate companies
Interior design firms
Hospitals
WHAT CLAIMS DO ERRORS AND OMISSIONS INSURANCE COVER?
Even the most distinguished pros make mistakes, namely doctors, accountants, dentists, surgeons, and real estate agents.
These mistakes can cost an arm and a leg if you don’t have errors & omission coverage and a client sues your business for millions of dollars for errors performed against them.
In addition to mistakes, errors & omissions insurance covers failure to meet a deadline in the performance of service to a client, professional negligence, breach of contract, and failure to adhere to particular standards of care.
Examples of claims your business could face include the following:
A client sues your marketing agency due to wrong advice they got from your marketing consultant, causing them to lose money.
A client could file a claim against you if your accountant offered the wrong financial advice.
A customer files a claim against your public relations firm after your communications strategy backfires and their reputation dwindles.
A customer sues you for breach of contract because your interior designer used the wrong colors when repainting their house.
A home buyer files a claim against your real estate company for negligence because your real estate agent forgot to include crucial details about the home.
A client business sues your accounting firm because your tax accountant made a calculation mistake that resulted in the client paying the penalty.
No one is perfect, so take errors & commission insurance for longevity in your business.
ERRORS & OMISSIONS INSURANCE COST
Some factors impact the amount of insurance premiums paid.
High-risk industries pay higher premiums. Case in point, a financial consulting company that advises clients where to invest millions of dollars will pay more premiums than an interior design company on average.
Higher coverage limits increase the cost of the premiums since you will get greater coverage compared with a similar business that picks a lower coverage limit.
Do you have a lengthy claims history? If so, expect steep premium costs.
Businesses in busy cities pay more than those in the outskirts.
Expect to incur about $500 to $1000 per year per employee and more if you have a history of myriad litigation issues.
WHAT COSTS ARE COVERED?
If your business is sued for a costly oversight by a client, and the court finds you guilty, errors & omissions insurance will cover particular kinds of settlement. For example, if the plaintiff incurred costs because of your wrongdoing, the insurance cover would cover the costs.
In the case of legal costs and attorney fees, it doesn’t matter whether you’re found guilty or not; the insurance policy will cover the costs.
GET ADEQUATELY INSURED
You now have a clear picture regarding what your business stands to lose without errors & omission coverage.
That said, at Zupnick & Associates, we safeguard you from financially draining and head-spinning lawsuits, through comprehensive errors & omission insurance.
Get in touch today.
To Err Is Human: All About Errors & Omissions Insurance
Elton Mwangi
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