Does Your Company Need Errors and Omissions Insurance?

If you consult, provide services to others, or sell for others, you should purchase professional insurance. This tailored insurance may help protect you from a potential claim arising from your professional advice or service. In your type of business, a client can hold you responsible for errors or failure in your work. The insurance that best meets your need is called professional liability insurance, malpractice insurance, directors and officers insurance (D&O insurance) or errors and omissions insurance.

Errors and Omissions coverage offers you or your company and your employees' additional protection against claims or lawsuits for errors or omissions which may have caused financial losses for your client. The insurance can be written to protect you from attorney fees as well as the amount of a settlement if you are found at fault. Consider the following information about the insurance coverage as it relates to your business:

Errors & Omissions Insurance can cover W2 employees and 1099 subcontractors, worldwide.
Many VC's and other investors require this coverage, including state and federal requirements for licensing and potential jobs.
This type of coverage is generally excluded by your Commercial General Liability policy, and if there is additional coverage for this exposure it may have limitations that you may not be aware of.

The following businesses should consider Errors and Omissions insurance:

Real Estate and Home Inspection
Consultants
Advertising
Web, Internet Providers, Programmers, and Graphic Designers
Florists
Building Contractors including Janitorial or Building Operations
Financial services
Professional services, including attorneys, dentists, doctors and chiropractors
Educational Services, K-12 Schools, Universities, Private Post Secondary Education, and Vocational Schools or Technical Schools.

The cost of each Errors and Omissions Insurance contract varies with its specifics. Each contract should be written specifically for you, and should contain the following information:

Dollar amount for each liability
Deductible amount for each liability
Deductible amount for defense costs
A section explaining what the policy is for: "This policy applies to errors, omissions or negligent acts in the course of providing or failing to provide professional services."
A section listing the services you provide in as much detail as possible
The retroactive date for claims ( unless written by an occurrence form)

Every company can and will make a mistake at some point. Be prepared. Purchase Errors and Omissions coverage to insure your mistakes, your employees' mistakes, and even mistakes made by the contractors you hire.