When evaluating the need for E & O coverage, a business should consider its relationship to their clients. If you are in the business of providing a service to your clients for a fee or remuneration, you potentially have E & O exposure.
Consider what would happen if the service you provide is not performed correctly, late or not as promised. What would the resulting problem cost your client in terms of money or their reputation?
No one is perfect, and even the best employees or subcontractors acting on your behalf can make mistakes.
If a mistake is made causing harm or damage to your client, E & O coverage can help protect you from defense costs and/or financial damages awarded against you.
These types of losses are not usually covered by your general liability policy; and by not purchasing separate E & O coverage, you may be taking a financial risk.
Even if not found at fault, litigation is both time consuming and expensive.
There is no standardized insurance industry policy language for E & O coverage. What might meet one business's professional exposures may not meet yours. Carefully review the coverage being offered being certain that it fits your needs and exposures. Your insurance agent can be of great assistance in making sure you make a sound decision.
A properly purchased E & O policy can protect you from your mistakes and the mistakes of employees and independent contractors you hire.
As reported by John Bures, National Underwriter P & C
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