Legal Protection Through 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.

Errors and Omissions insurance can protect individuals and companies from claims when your client or customer tries to hold you responsible for errors or for failure of the work to live up to what was stated in the contract. Contract performance disputes can be serious trouble for a company, but a good insurance program can keep you in business.

Insurance like this is applicable to almost any business, but it is perhaps most useful to companies in the service industry. Any company that offers a service for a fee is open to have the final quality of that service questioned. Without the tangible proof of a finished product, many clients will turn to litigation when they feel they are not getting the full value for their money.

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.

A company can do everything in their power to finish a task as outlined in a contract, but sometimes things happen that prevent it from happening. This could be due to the poor performance of a single employee, or a horrible accident on the job. But just because the situation was out of your control doesn’t mean a client won’t seek some form of compensation. You better be ready for it.

Different insurance companies will, of course, offer different levels of Errors and Omissions protection, and you should make the sure coverage is right for you. There may be some options you don’t need, and there are some features you don’t want to miss. Either way, make sure that you understand your policy and how it will protect you.

You should also be sure that your policy will cover everything from a possible judgment against you to the court fees and lawyer costs that will inevitably add up. It doesn’t matter how baseless the claim is, if you go to court, it will still cost you a lot of money, so be sure that the policy covers all these costs. It should also protect you whether the error was made by full time, W2 employees or 1099 subcontractors.

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.

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