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What is Errors and Omissions (E&O) Insurance?
Errors and Omissions (E&O) Insurance is essential for small businesses, protecting against losses from negligence claims related to professional services or advice. Coverage protects your business against costly litigation and judgments stemming from actual or alleged errors, omissions or negligent acts.
How Does Errors and Omissions (E&O) Insurance Work?
E&O Insurance protects small businesses from losses due to negligence claims by providing coverage for alleged mistakes or failure to use due care in rendering professional services. Policies deliver vital financial protection against catastrophic events impacting a company's professional reputation and assets.
Here's how it works:
- It provides coverage for claims alleging negligent acts, errors or omissions during professional services or advice
- It pays for the legal defense costs of the insured small business if they face a covered claim
- If the small business is found liable, the E&O insurance covers any settlements or court-awarded damages up to the policy limits
- It safeguards the company's assets and cash flow from the potentially devastating costs of negligence lawsuits
- Coverage is claims-made, meaning the policy must be in force when the claim is first made, even if the alleged error occurred earlier
- Risk management practices like training, procedures and documentation are still important to reduce errors and control costs
- E&O insurance provides vital financial protection for professionals like consultants, accountants, lawyers and others who provide paid expertise
What Does Errors and Omissions (E&O) Insurance Cover?
Negligence
Coverage for claims when professional services did not meet the expected standard of care, resulting in a client's financial injury.
Mistakes/Errors
Protection against claims alleging mistakes or errors you made while rendering professional advice or services.
Omissions
Coverage for claims arising from failing to provide an expected professional service or neglecting critical information.
Missed Deadlines
Insures against losses caused by failing to complete work within a contracted timeline or deadline.
Breach of Contract
Covers claims for failure to fulfill obligations outlined in a professional services contract.
Defense Costs
Pays for attorneys' fees and legal expenses to defend against covered negligence claims.
Settlements/Judgments
If you are found liable, the policy covers court-awarded damages or settlements up to the policy limits.
Supplemental Costs
Some policies offer additional coverages for public relations expenses, disciplinary proceedings and other supplemental costs.
What is Not Covered?
Errors and Omissions (E&O) Insurance does not cover intentional or dishonest acts, bodily injury or property damage claims, employers' liability or general business liabilities unrelated to professional services. It excludes fines, penalties and punitive damages awarded by courts. E&O policies also typically contain conduct exclusions for claims arising from discrimination, antitrust violations or fraudulent activities. Most E&O insurance only covers services or advice provided within the defined professional services performed by the insured.
How Much Does Errors and Omissions (E&O) Insurance Cost for a Business?
The cost of Errors and Omissions (E&O) Insurance for a business depends on the risk profile of the professional services covered. Key factors impacting premiums include the profession/area of expertise, revenue from professional services, number of consultants/advisors, desired coverage limits and claims history. Higher-risk professions like law, architecture and consulting face steeper E&O insurance costs compared to lower-risk fields. The premium pricing accounts for the projected claims frequency and severity based on the specific risk characteristics.
Why Choose BenePac for E&O Insurance?
With over 40 years of expertise in delivering employee benefits and insurance solutions, BenePac is the ideal choice for Errors and Omissions (E&O) Insurance. Our tailored approach ensures your insurance policy matches your business requirements. Unlike generic options, we conduct thorough risk assessments and operational analyses to craft a package with optimal coverages and limits. Whether you operate a large corporation or a small business, BenePac offers affordable solutions to provide financial security and peace of mind.