Errors and omissions refer to mistakes, negligence, or discrepancies in a business’s accounting records, which can possibly be interpreted as fraud and lead to legal action. Business owners and executives have several legal and financial responsibilities that accompany their roles, and if they fail to fulfill these responsibilities by inaccurately reporting income, errors and omissions insurance may reimburse a business for problems arising from these fiduciary oversights.
As a business owner, you know how important it is to live up to your promises. Consumer trust is a key part of earning repeat business, which in turn may support a stronger and healthier company. Errors and omissions claims have been trending higher in recent years, with multi-million dollar lawsuits being filed frequently. Accordingly, businesses should find out if they have appropriate coverage policies in the event a large claim is filed.
What E&O Insurance May Cover
Policies vary, but some forms of errors and omissions insurance cover the following (Note: Industry requirements vary):
- Claims and Damages: These are one of the major sources of potential loss that your company faces. E&O coverage on claims may reimburse for payouts as a result of such claims being filed.
- Defense Costs: Whether or not you win a case, your attorney is going to expect payment. E&O insurance may reimburse for their fees.
- Employees, Temporary Staff, and Independent Contractors: You may be liable for the actions that anyone associated with your business takes—whether or not they’re an employee. This part of the policy may help protect you if they make a mistake.
- Negligence: Often considered one of the most important parts of E&O coverage, negligence coverage may reimburse you for costs associated with problems like making a mistake while giving advice or failing to complete a job.
Errors and omissions policies payouts vary among companies depending on the possible severity of financial mishaps. Call United Group Insurance to ask for more information. You may need to increase your policy cap as your business grows. Check in regularly with your insurance agent!