Posted by : Dan Levenson Wednesday, October 1, 2014
If you’re a typical business owner nowadays, there’s a chance you might have heard about the E&O insurance before. But what is it exactly?
E&O means Errors and Omission. It’s a specific type of business insurance which covers either your company as a whole, or yourself as an individual, from damages that come after a failed product or service, or the latter not living up to expectations.
In considering the need for an E&O, you need to ask yourself first: How badly do I need it? E&O insurance will work like a charm if your business’ line is something that entails a great potential for liability (aka high-risk fields). Medical professionals are more often than not protected by E&O. In their case, however, the insurance is typically termed as “malpractice insurance.”
The cost of an E&O insurance heavily depends on a number of factors. These include the inherent risk of the business’ work, the rating category under which your business is classified (i.e. high-risk or low-risk industries), the amount of claims for inadequate service that have been filed in your industry over the years, and in several cases, your business’ locale.
Bottom line is, an E&O insurance is critical for every business regardless of whether it’s high-risk or not. Any company could make a mistake. It doesn’t matter if your company has the latest equipment or the most skilled employees. When things get sour with your customers, it is still best to be covered.