Think about this insurance as a financial shield that may protect you, your company, and your employees if the unfortunately lawsuit comes knocking on your door.
E&O insurance is crafted for professionals that service the public and other business in exchange for remuneration (money). Now you may be a charity or a volunteering company that charges no money to operate. Guess what, you still need to be insured.
Using an example, let’s say you are a retired psychologist offering conversational therapy to young adults for free and out of the goodness of your heart. You receive no monetary benefit by providing your services BUT you can still be held liable for providing your professional services.
It’s as simple as this.. If you believe that your service, advise, products, or whatever, could cause a loss to another out of any situation arising, then you need to be insurance under an adequate E&O policy.
Why risk your future? It’s simply not worth it.
For business owners that carry a Commercial General Liability Insurance Policy
Having a general business liability policy does not guarantee a full protection against your business lawsuits. It goes as far as protecting you against physical acts. To give you a couple of examples, the customer getting injured in a store or from a faulty products you sold.
As a professional service provider, you are at risk of being sued if you make mistakes that negatively effect a client. But there is a way of preventing these risks by having an errors and omissions insurance policy in addition to a CGL policy.
What is E & O?
Errors and omissions insurance, also known as E&O insurance, is a professional liability insurance that protects 100’s of professionals such as lawyers, doctor and/or financial advisers against claims made by clients and third parties in an event leads to financial loss, physical harm, or loss of reputation for a client.
There can be many other reasons in addition to the ones mentioned above that can summon a lawsuit. It is always best to speak to a licensed insurance expert in your industry before deciding on purchasing a policy for your business.
Who should have Errors and Omissions Insurance?
Errors and omissions insurance is targeted to any professional who provides services to businesses as well as individuals. Medical professionals are often required to carry a type of malpractice insurance.
100’s of professions in the province of Ontario, Canada require professionals to be adequately insured up to a certain limit.
In some rare cases, carrying errors and omissions insurance may be optional from a legal standpoint, but it is always 100% a good idea to have it.
How to get E & O Insurance?
Companies that sell general business liability insurance policies in ontario often also offer errors and omissions insurance as well. If not, there are several agents & brokers who specialize in offering these services, especially if you live in a populated city like Toronto.
Although several companies, including your current CGL provider may offer this policy, you may still be required to go through a separate underwriting process. Through this process, you will most likely be asked to provide copies of contracts as well any quality control or training policies you may already have, including your history of claims or lack thereof.
Rates for errors and omissions insurance not only depend on your personal situation, but also on the industry you work in. For example, an industry where mistakes are common and often lead to lawsuits, the premium rates will be higher, even if you have not been the target of a lawsuit.
Without errors and omissions insurance, there is a possibility of winding up in a financial straits over a mistake or the loss of a lawsuit. In a case like that, you will need a way to get debt relief or debt settlement.
