What is errors and omissions insurance?
Also known as professional liability insurance, this insurance compensates you for financial losses in the event of a claim, compensation or lawsuit from a client, patient or user who believes they have suffered harm due to error or negligence (whether justified or not) committed by your company.
Companies can be blamed for various types of wrongdoing that can lead to a request for compensation: failing to accomplish set tasks, providing incorrect advice, failing to achieve performance targets, violating a contract or a professional obligation, etc.
Errors and omissions insurance protects the policyholder from the financial consequences that may be incurred as a result of an error, omission, negligence or malpractice committed by themselves or a member of their team. This means that if needed, the insurer will take on the costs of defending the insured professional if they are sued, as well as any compensation or interest that the professional is legally required to pay.
Be sure not to confuse errors and omissions insurance or professional liability insurance with general liability insurance!
Who should purchase errors and omissions insurance?
Although it is not mandatory, this insurance is required by certain professions to comply with the standards of the industry, local government or professional bodies. In addition, more and more clients also want their suppliers to have this coverage.
Beyond these essentials, any company that provides professional services or advises clients should consider this insurance, since no one is safe from an unhappy customer!
Here is a non-exhaustive list of trades and fields that could benefit from this type of insurance:
- Business consultants
- Management and business coaching consultants
- Engineers and architects
- Environmental consultants
- Staffing agencies
- Security agencies
- Building inspectors
Technology and media
- Marketing and communications agencies
- Web design
- Graphic designers and printers
- Computer consultants
- Software design
- IT services
- Internet and web hosting providers
Health care and beauty salons
- Hair salons
- Beauty and cosmetology
- Tattoo studios
- Medical care (doctor’s offices, dermatologists, dieticians, hearing aid practitioners, podiatrists)
- Dental clinics
- Laser vision correction clinics
Service providers and retailers
- Funeral homes
- Travel agencies
- Retirement homes
- Property management
Note that you can tailor your coverage to your field, even if it is a niche industry. This way, insurable “professional services” can be defined in your contract.
Riders, or coverage extensions, can also be added to further improve and personalize your insurance policy. It is also important to note that insured trades and fields, as well as exclusions and deductible amounts, vary considerably from one insurance company to another. This is why it’s important to get good advice!
In order to ensure that you are properly covered by E&O insurance, speak with an independent insurance broker. They will use their expertise to conduct an in-depth analysis of your company’s situation, advise you on the right coverage and work with insurance companies to find the right insurance for your needs, at the best possible price.