subject: Preparing To Select The Right E&o Policy [print this page] Professionals in high-risk industries require some type of protection from court proceedings caused by errors in handling information. Error omission insurance, or E&O insurance, is a liability product that covers incidents outside the scope of general liability insurance. Professionals in almost any industry are susceptible to genuine mistakes and E&O insurance can protect an individual or company from the costs of litigation and claims payable due to legitimate errors. Mistakes that result in financial losses for clients are covered by E&O insurance and payable up to the policies contractual amount. Prior to selecting an E&O policy, consumers should review several business and policy components.
The exposure to errors and potential for financial impact a business or professional experience dictate the minimum language required of an E&O to adequately provide protection. For example, an attorney and a technology professional are exposed to different opportunities for an error to become a liability. An attorney's error in reporting the consequences of a litigation strategy may result in a defendant's lawsuit. On the other hand, a software programmer's error in code can result in financial losses for the client. As a result, a strategic review of a business' exposure to error litigation should take place prior to seeking an E&O policy. Furthermore, investigation into the size of the policy is directly related to the business industry. To illustrate, a stock brokerage can potentially have several claims filed for large amounts, which affects the initial amount of the policy. Other factors affect the monthly premium of the policy.
An error omission insurance policy's monthly payment increases with several considerations in addition to the face value. A business' age, location and industry can have a substantial effect on pricing. In addition, the insurance company that issues the policy has some bearing on price. The company's experience with claims also affects pricing in that a solid claims prevention program may lessen the dollar amount of monthly premiums.
A company can contact any number of insurance agencies to discuss purchasing E&O insurance. Some companies offer the product in their portfolio while others specialize in E&O. The application process varies from insurer to insurer. Some agencies simply require the completion of an application while others will request substantial documentation. For example, an agency may request company contracts, training documentation and other information that provides insight into the claim prevention process. Prior to purchasing a policy consumers should consider what type of quality control programs are in place and how many loopholes are evident in client contracts.
E&O insurance policies protect a business from exposure to litigation; however, these exposures vary based on several factors. Selecting the right E&O policy requires some research, preparation and a solid strategy for contacting the right agency.
