Errors and Omissions Insurance Frequently Asked Questions

What is errors and omissions insurance?

Errors and omissions insurance covers the liability of businesses that provide professional services. Such errors are most likely to cause financial harm to the involved parties. An error and omission is a mistake committed by experts within their field of operation and can occur within most professions. When an expert who has taken up errors and omissions insurance Canada offers is in the wrong, they are protected against bearing the full weight of their mistake.

 

Errors and omissions insurance can also be referred to as:

  • E & O
  • Errors Omissions
  • E & O insurance
  • Professional liability insurance
  • Malpractice (for medical and legal professionals)

 

What does E & O cover?

All errors and omission insurance policies are exclusive therefore each of them has exclusive coverage depending on the party involved. However, all policies are designed to assist the accused to cater for defense costs as well as the damage penalty as a result of the error. Even the best professionals can be charged of such mistakes. Defense costs are the bulk of the coverage. It is common to find the professional spending thousands of dollars in defense only to get acquitted.

A professional liability claim must prove the negligence of the expert either by failing to perform as required or failing to perform at all. However, errors and omission insurance does not cover illegal, fraudulent and intentional activities. Most also have a limit to how much they can cover for a particular account. Therefore, talk to your insurance provider for a tailor made cover.

 

How much does E & O cost?

The insurance premiums are based on several factors such as:

  • Type of policy
  • The kind of professional services one offers
  • The annual revenues of the expert
  • Claims history
  • Number of professionals in the company

When shopping for a policy, do not consider price only. You might find a cheap policy that excludes some of the core services you offer. In such a case, the plan is rendered useless. A well-structured policy will provide protection to your company at competitive prices.

 

Why should you purchase E & O insurance?

At times, lawsuits may not be about negligence but rather allegations of neglect. Our government is litigious in that anybody can face the law. The terrible part is that not everybody is genuine thus you might be accused of error you have not committed. While defending your company against genuine and false allegations, you might suffer hefty losses regarding the loss of productivity or legal charges.

Errors and omission insurance offers you the chance to protect your company before these events occur. Therefore, you can transfer part of the financial risks of unpredicted legal costs. Thus, you have reduced economic implications.

 

 

 

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