What do lawyers, accountants, insurance agents, real estate agents, and other service professionals have in common? They have the pleasure of and opportunity to benefit and better the lives of many people. However, this also leaves them open to the possibility of having unsatisfied clients accuse them of negligence or errors and omissions in the service they provided.
General Liability vs. Professional Liability
There are two main types of liability for businesses: general and professional. The more common of the two, general liability, focuses on physical damages. This includes bodily injuries and damages to physical property. Professional liability is more directed towards economic or professional impacts. Maybe the client felt that the service provider made mistakes or gave bad advice that cost them money or damaged their reputation. Maybe the professional did not fully satisfy the expectations the client had regarding services that were to be performed. This liability is also called, “Errors and omissions liability (E&O).”
Importance of Protecting Yourself
There may be times when you or your company simply makes a mistake. There can also be times when your client is just not satisfied. While there is no way to guard yourself against this happening, you can (and should) take steps to protect yourself in case it does. The ensuing process can get very costly, especially if claims hold up in court, but errors & omissions insurance can help cover the court costs and attorney fees as well as some (or all) of a settlement that is ordered to be awarded. Unfortunately, E&O insurance is often overlooked or postponed by business owners. Many times, the value and importance is not realized until a claim is made. Doing research and understanding what risks you or your business are open to as soon as you begin business can help save you time and money in the long run. When looking into E&O liability insurance, it is suggested that you meet with an attorney to structure the policy to fit your specific needs. There are so many different types of businesses that provide services to clients that it is not plausible to create a “one size fits all” policy. Getting the right wording is key. Owning a business can be very rewarding; however, it can also be very risky. There are many liabilities you incur. Make sure you’ve done your research and know ways to protect yourself against those liabilities.