The Benefits Of Errors And Omissions Insurance

We live in an extremely litigious era, and no matter how unintentional a mistake might have been, or how baseless a client’s claim might be, many people turn immediately to the courts and file law suits to seek some kind of compensation for damages real or perceived. This is where companies and individuals can turn to Errors and Omissions insurance for legal protection in these circumstances.

When a customer or client attempts to hold you or your company responsible for errors or failure to complete work as specified in a contract, Errors and Omissions insurance can cover you. Any contract performance dispute can be serious problems for a company, but the right insurance program can help you work through it.

Any professional business can benefit from this kind of insurance, but it is particularly useful for companies in the service industry where clients are more prone to dispute the quality of results. When you offer a service for a fee there isn’t a tangible object to prove the work was done properly, and this is why clients are more prone to turn to litigation.

Think of Errors and Omissions insurance like you would malpractice insurance. Both of these policies are there because sometimes, despite your best efforts, things just go wrong. And when it is a costly something and 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.

Your policy should at the very least cover all possible judgments against you and any of the court fees and lawyer costs that are associated with litigation. Whenever you go to court, these costs can quickly add up and hurt your company if you can’t afford them all. The policy should also cover you whether the error was made by a W2, full time employee or a 1099 subcontractor.

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.