subject: E & O – Do You Need it? [print this page] E and O and other similar insurance policies designed for professionals can be crucial for professionals whether they are low profile licensees or high profile professionals. At one time, only attorneys and doctors and other highly visible professionals needed to cover their rears with malpractice insurance and other related policies.
Today architects, real estate agents, nurses and pension plan fiduciaries are being sued for their professional errors. Not having a policy that can protect you against legal action can mean that your career is over and that your home is auctioned to pay your legal fees.
Being negligent can start with something small that over time into something catastrophic. You might inadvertently discard a page from a client's file or shred an important document. This could cause you to give a client the wrong advice or miss a deadline.
No one can make the right decision every single time. Having an insurance policy that covers you for the human error that we are all subject to can save your rear.
What is errors & omissions? It is similar to a physician's malpractice insurance. It protects you the professional when someone sues you because you've made a professional mistake that costs them money.
It important to know that professional liability is not included in a general liability insurance policy. So even if you have protected yourself with a general liability policy, you still have exposure to the risks that are part and parcel to your profession.
What is not covered by E & O? These insurance plans are not designed to cover you for criminal acts. They will not cover a professional for acts that are dishonest or fraudulent.
Neither general liability insurance nor professional liability insurance is designed to cover dishonest or fraudulent acts. They are designed to protect you from negligence.
An honest mistake shouldn't force you to end your career or wipe out your life savings. errors and omissions coverage is designed to cover inadvertent mistakes and let you to continue on with your life and career.
An E and O policy is, however, likely to cover you if you are taken to court due to a mistake you have made in your business or profession that is unintentional. Just as important is the fact an errors and omissions policy will cover you when you haven't made an mistake honest or otherwise, but someone is suing you any way.
Each generation tends go get more likely to take professionals to court. Professionals are being taken to court now at a rate that was unthinkable a decade ago. If you believe that you are in a profession that makes a costly possibility, you just might be correct.
There doesn't appear to be any limits to what a professional can be sued for. Sometimes the professional has made a mistake. Sometimes the lawsuits are frivilous, but being sued can be costly whether or not you have made even the smallest mistake.
If you are taken to court, you will probably find that your E & O insurance carrier will cover your legal defense. The cost of your attorney will not be deducted from the amount your company might pay to the party suing you. This can mean a savings of thousands and thousands. Being sued can be costly even if you are not guilty of a professional error.
If your profession puts you in a position of trust and a high standard of conduct is expected of you and other members of your profession you may need an errors & omissions policy whether or not your employer mandates it.
The number of lawsuits filed against professionals tends to increase during tough times. People who are out of work are more likely to sue. Failing to buy coverage before you are hit with a lawsuit could mean the end of your career and any nest egg that you have saved.
