Top 5 questions from small businesses about errors and omissions insurance

Want to know what errors and omissions insurance is? What it covers you for, and why you need it?

You’re not alone. We get asked these questions, and more, every day.

So, here’s some answers:

#1 – What is errors and omissions insurance? 

It doesn’t matter if you work alone from home. Or have 50 employees. If you offer a professional service, errors and omissions insurance is a must.

As a professional, you can be sued for professional negligence. If a client claims you made a mistake. Or left something out. And it cost them money.  You could find yourself facing a claim.

If this happens – whether you made a mistake or not – errors and omissions insurance will keep you in business. And your professional reputation intact.

E&O for short, just to confuse you, errors and omissions insurance is also known as professional liability insurance. But what’s in a name. All you need to know is they cover you for the same.

#2 – Why purchase errors and omissions insurance?

Ø  Does your small business provide a professional service?

Ø  Do you give advice to your clients on a regular basis?

Ø  Has a client required you to have errors and omissions insurance before they’ll take you on?

If the answer’s yes to any of these questions, you should get E&O coverage.

#3 – What does errors and omissions insurance cover?

Errors and omissions insurance policies can vary. Some don’t just cover your business, they’ll cover you, as an individual.

So it’s important you check the details of your policy to see what’s covered. And chat with your insurance agent, if anything’s not clear.

#4 – What should the policy offer me?

Legal defense costs

These should include the cost of hiring a lawyer, judgments against you and court fees. Plus compensation, if you’re found liable.

W-2 and sub-contracted employees

If you have temporary staff, or subcontract out your work, you need your policy to cover them.  You should also ask your sub-contractors if they have errors and omissions insurance. If they’re sued separately, or alongside you, your policy might not cover them.

Copyright infringement and intellectual property infringement

However careful you are to avoid copyright and/or intellectual property infringement, it can happen. Even unintentionally. So, it’s important your policy covers you for both these scenarios.

Personal injury

Not everyone is going to like you and/or your company.  Having personal injury coverage on your errors and omissions policy can help protect you and your firm. From slander, invasion of privacy, and libel.

Coverage worldwide  

Important if any of your work is completed outside the U.S.

#5 – What else do I need to think about when I’m buying E&O insurance?

Aside from ensuring your policy covers the types of situations you may come across, here are a few more ideas about what you should consider when choosing errors and omissions insurance:

Customized coverage

You may not be concerned about having subcontracted employees covered, particularly if you do not use them. However, you may need worldwide coverage.  It is a good idea to look for coverage that is customized to meet the needs of your small business.

Flexible payments

An errors and omissions insurance policy may cost you a lot of money.  However, it may benefit you to find a company that offers a payment plan that suits your company.

#5 – What else should I know about errors and omissions insurance?

Aside from ensuring your policy covers the types of situations you may come across, here are a few more ideas about what you should consider when choosing errors and omissions insurance:

Customized coverage

You may not be concerned about having subcontracted employees covered, particularly if you do not use them. However, you may need worldwide coverage.  It is a good idea to look for coverage that is customized to meet the needs of your small business.

Flexible payments

An errors and omissions insurance policy may cost you a lot of money.  However, it may benefit you to find a company that offers a payment plan that suits your company.