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What is errors and omissions coverage and when do I need it?


We talk a lot about the big 3, life, home and auto in our blog posts. But today we want to take a moment to talk about something else entirely. It’s easy for equally as important coverages to get bypassed by companies when discussing types of coverages and when they are relevant and what is adequate coverage because many of them are niche coverages. Things like vacant dwelling is a very important coverage for those who need it, but the number of people who need it is substantially lower than people who need auto coverage. So today we are going to cover the “what is” and the “when do I need it” for one of these coverages, errors and omissions.

Let’s start with the easiest and most important part, what is errors and omissions coverage? This is actually a pretty easy thing to sum up. Errors and Omissions or “E&O” coverage is the equivalent of liability insurance for a business you own. It covers your court fee’s and any settlements you may have to pay out due to a mistake or “error or omission” you may have made that lead to a lawsuit. So if you are a coffee stand and you serve a cup of coffee that is far too hot and Mr. or Mrs. morning drinker immediately takes a drink, burns their mouth, sues you and then wins the court case. A portion of or all of your fees may be covered depending on how much coverage you actually have.

How do you know if you should carry E&O coverage? Again this is a pretty easy line to draw. If your a business owner that provides a service for money then you should be having a conversation with your agent regarding E&O coverage. This isn’t a 100% surety that you will need it, but its a pretty safe bet and it is defiantly the best way to determine whether or not you should be asking about it. Just like your liability coverage on you home, auto or umbrella policy is to protect you from loosing your assets, that’s what E&O’s function is except its for your business. So this is a conversation you should be having to protect your business assets before you ever set out on servicing customers. Luckily this is an easy conversation to have, you can reach out to us today and get this conversation started to quickly determine whether or no E&O coverage is right for you and your business!

What does E&O coverage not cover? E&O offers protection from mistakes or accidents made during the process of providing a product to a customer. So if a mistake or negligence on the part of your business is to blame for damages incurred but a customer of your business that is where you coverage comes in. However this is not a blanket liability for everything business related. So for instance if someone causes intentional harm or damage to a customer that would not be covered under E&O, if an employee is hurt while on the job this is not covered under E&O coverage, anything that could be considered illegal is not covered and any property damage that may happen to your business is not covered under your E&O policy. It is important to note that its not that these things cannot be covered under a different business policy in some way but they are not covered under your E&O policy. If you have questions regarding what other business related policies are available so your adequately covered in the any event we can start that conversation today as well!

Small businesses are fundamental parts of a vibrant and varied local economy and no one wants to see an otherwise preventable liability claim take a small business out of our community. This is an important moment as a small business owner to remember that insurance is assurance, assurance that you can open tomorrow, assurance that you will continue to serve your customers and community, assurance that no matter what you face as a small business owner, you are ready.

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