Common Myths about Errors and Omissions Insurance
Posted on: January 26, 2018 by Signature Insurance Group
One of the most common – and costly – mistakes that a business can make is to not obtain enough insurance coverage. Many business owners are under the impression that their general liability insurance coverage is enough to keep them protected from any risks they may encounter. This type of confidence can leave a business vulnerable to some very large liabilities and losses. A large company may be able to recover after making this mistake, but many small businesses end up not as fortunate. Common myths about Errors and Omissions (E & O) Insurance can perpetuate the trend of opting out of an important type of insurance coverage. Here are some of those myths, as well as facts that business owners should know before they find themselves making a costly mistake.
Myth #1: “My general liability insurance covers everything.”
Your general liability coverage will protect your business from losses related to property damage, injuries to third parties such as slip and fall cases, resulting medical expenses, and attorney fees related to such lawsuits. What it doesn’t cover is losses that may occur due to owner or employee negligence, programming or paperwork mistakes, and other human errors. Simply put, general liability doesn’t cover the services you’ve provided.
Myth #2: “We don’t make mistakes.”
No business owner can guarantee that their company’s services are 100% perfect at all time. Add employees and contractors into the equation, and a business owner is liable for their acts of negligence or mistakes as well. General liability insurance will not be much help when a client or customer opens a lawsuit because of oversights, under-delivery, mismanagement, or other claims related to the services provided. Errors and Omissions Insurance covers that gap.
Myth #3: “We are only giving advice, not providing a service.”
Contrary to popular belief, professional advice is just as much a part of a business’s service as an actual physical service. Even with a disclaimer of “this is only advice, not a service,” a business can be held liable for a mistake resulted from a client taking their advice. Consulting liabilities pose a significant risk to small business because the cost to defend a claim can overwhelm their limited budget. E & O insurance is necessary to help with litigation expenses and potential penalties.
Myth #4: “E&O insurance is too expensive!”
Errors and omissions insurance is an added expense for businesses, but the benefit well outweighs the cost. An experienced insurance specialist from Signature Insurance can help business owner’s select insurance coverage that is customized to the company’s individual needs, so not only does the business benefit from E&O protection, but they’re not paying for additional coverage that doesn’t apply to their services.
About Signature Insurance Group
Signature Insurance Group has been working since 1969 to provide comprehensive insurance solutions to individuals and businesses across the United States. We offer a range of insurance products and services in risk management, employee benefits, business insurance, and personal insurance, and we pride ourselves on our commitment to creating “Signature Relationships” with our clients where we commit to providing the best, most comprehensive service possible. To learn more about our goods and services, contact us today at (800) 464-3606.