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What is errors and omissions insurance?

We're all Business

Posted on Monday, June 8, 2020

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You’ve just bagged a new client who has hired you to do work you have plenty of experience doing. So nothing could go wrong, right? Unfortunately, unexpected mistakes could happen, and some of them could be very pricey. And without the right protection, your business could take a serious financial knock.

 

For example, if an accountant that works for company A forgets to record a transaction, company A may take legal action against the accountant for their mistake.

 

On the other hand, even when you haven’t done anything wrong, you’ll still need to prove it which can be very expensive.

 

This is where errors and omissions insurance comes in. It covers legal costs for any work-related mistakes your business makes. These usually include:

 

  • Failure of design or specification
  • Negligent errors, acts or omissions to the work at hand.
  • Incorrect advice being given (e.g. incorrect incorrect legal, accountancy or professional technical advice)

 

Who needs E&O insurance?


Most businesses can benefit from errors and omissions insurance, as it is a lot cheaper than paying for hefty legal costs. However, certain businesses and professionals should have it, seeing as they are more at risk than others. For instance, legal, engineering, agency, professional advice, so they’d be more at risk than others.

 

Small businesses should also consider getting covered, as they may not have the funds to support themselves in a legal E&O battle.

 

At Budget Insurance, we provide cover for common small businesses, sole traders and larger businesses, including:

 

  • Accountants and auditors
  • Architects
  • Attorneys
  • Engineers
  • Project managers
  • Health and safety managers
  • Management consultants
  • IT developers
  • Estate agents
  • Recruitment agents
  • Loss adjustors
  • Multimedia professionals

 

Why should you get E&O insurance?

 

Sometimes an errors and omissions claim may not seem like a major problem, but it could put your entire business at risk. For example, even if the person who sued you decides to drop the lawsuit, there will still be expenses involved (like legal costs in defending the matter).

 

And, if you don’t have a savings fund for cases like these, without E&O insurance, this may have to come out of your business’ account or your personal funds.

 

At Budget Insurance, we will give you peace of mind if your business is involved in any errors and commission cases, with cover for:

  • A limit selected by you
  • Legal costs for defending an action and any damages, if awarded
  • Unintentional breach of intellectual property rights
  • Costs involved when solving a dispute between you and a client or customer