Some mistakes are not forgiven or forgotten. Service-providing businesses are vulnerable to claims filed by disgruntled clients. With errors and omissions insurance, though, these businesses can protect themselves financially.
How E&O Insurance Protects Businesses
E&O insurance comes in several different forms, but in general, this type of coverage protects businesses that are sued for negligence or failing to provide a particular service. For medical practices this is known as malpractice insurance, and for law firms it is known as professional liability insurance. Most policies cover defense and settlement costs as well as the damages awarded to clients. Civil lawsuits can cost businesses thousands of dollars, and the insurance prevents them from bearing the full weight of this financial burden.
Why Businesses Need Insurance
Clients file claims for a variety of reasons, including:
- Inaccurate advice
- Violation of good faith
By having insurance, businesses ensure that their financial assets are protected in the event of a civil lawsuit. There are various forms of errors and omissions insurance, with some protecting employers and others protecting manufacturers. When it comes to insurance, businesses are better off when they acquire a comprehensive policy.
When businesses make mistakes, they risk upsetting clients and causing claims to arise. With E&O insurance, they secure a thorough form of protection. Mistakes are always going to occur, but this type of coverage prevents them from leading to devastating consequences.