Errors & Omissions Insurance

Errors & Omissions Insurance, also known as Professional Liability Insurance, provides valuable protection for professional service providers from claims of negligence or failing to perform professional duties correctly.

What is Covered?

Errors and Omissions Insurance provides coverage for most every alleged claim that is not considered an intentional act:

  • Alleged or actual negligence claims
  • The cost to defend your business
  • Libel or slander claims
  • Infringement upon copyrights
  • Coverage provided on a worldwide basis
  • Coverage for temps, independent contractors and remote employees
  • Actions brought from services provided in the past
  • Financial claims and damages

Any business or contractor that holds themselves out as a professional or expert is subject to an Errors & Omission claim. Any business that is required to be licensed to operate is especially susceptible to these types of claims and the most expensive part of the claim may be just defending your business. There are particular claims that may not be covered, however:

 

  • Claims for bodily injury or property damage
  • Employee matters such as wrongful termination
  • False advertising or intentional slander and libel
  • Intentional fraudulent acts
  • Intentional infringement of patents and trade secrets

Intentionally exposing personally identifiable information

No Limit to Number of Vehicles

For example you are contracted as a marketing consultant to create a logo and other advertising material for a new product. You then unintentionally use a logo design very similar to a competitive product and your client is sued and sues you as a result. In this case, your Errors and Omissions policy will respond by offering defense costs and the funds that may be needed for a settlement or financial award by the court. Another example might be that you are hired as an independent contractor to offer IT technology consulting for your client. As a result of your service, a virus is introduced into your client’s system that allows a hacker to access the client’s database. In this instance, your client is more than likely to bring an action against you for failure to perform professional services and your Errors and Omissions policy will respond.

 

There may even be instances when your policy will need to respond when you haven’t made a mistake. Your business could very well be blamed for a system failure that you had no control over. Even though this may not be an error on your part, you will need to respond to an action and if you have the proper liability insurance in place, the insurance company will foot the bill.   To put it simply, any business offering a professional type of service is susceptible to making an error. Since your policy will also cover employees, the business owner will not need to fret each day an employee is working on her behalf. It is logical to believe that an employee may not use as much diligence as his employer when performing services so the insurance policy can act as a safety net on behalf of the employer.
  Any professional, from the neighborhood barber to the local law firm, should consider purchasing this valuable coverage, and in many cases may be required to by the state they operate in, just to open for business.

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