Defending a suit is expensive, as legal fees will stack up even if you ultimately win the case. Lose or settle a case, and the financial damage can be irreparable, to say nothing of potential professional consequences and their impact on future earnings. Whether you are a one-person service operation or you run a larger business, it’s important to protect yourself as a service provider.
Errors and omissions insurance is designed to do just that. This type of coverage is most commonly associated with healthcare professionals, given the inherent risk in the field, but there are many other types of service providers who need it, too. You may be surprised by the level of risk present, even in relatively “safe” service fields.
What is Errors and Omissions Insurance?
Errors and omissions insurance is known by a variety of names, depending on the context, and generally covers legal fees, settlements, and judgments. In healthcare, errors and omissions insurance is often referred to as malpractice insurance. For service providers in the legal, financial, and design fields, it’s sometimes called professional liability insurance.
By any name, errors and omissions insurance protects service providers when an error or omission is made that prevents the provider from delivering a promised service, or causes the service not to live up to previously established expectations, resulting in financial loss for the client. Put simply, it protects you from mistakes on the job, and the lawsuits that potentially follow.
How is Errors and Omissions Insurance Different from General Liability?
There’s a common misconception that if your business is covered by a general liability policy, then that’s all the protection you need. In reality, errors and omissions and general liability cover entirely different situations. General liability policies typically cover bodily harm, property damage, and associated costs. Errors and omissions coverage protects you from real or perceived financial loss by clients, which general liability insurance does not cover. It’s not an either-or choice, as both types of coverage are essential elements of a quality commercial insurance plan in Calgary and Alberta.
Who Needs Errors and Omissions Insurance?
Any service provider who can potentially cause financial loss for a client should have an errors and omissions policy. Architects, engineers, lawyers, and healthcare professionals head the list, as a small mistake in any of those fields can lead to a huge financial loss for the client.
Any marketing service provider, digital or otherwise, also incurs the risk of litigation when a marketing mistake damages a client’s reputation. Shipping companies, web hosts, printers, tradespeople, and many more make the list. In the end, if you provide a service in exchange for a fee, you should strongly consider errors and omissions insurance.
Why Get Errors and Omissions Insurance?
Anticipating future mistakes may seem an unpleasant task, but it’s really about remaining realistic, not pessimistic. With a balanced analysis of the potential for errors that could cause financial loss to your clients, you can honestly evaluate your need for errors and omissions insurance as a service provider. It’s worth the effort to protect yourself, your business, and your financial well-being from potentially costly litigation.
Lawsuits are a reality of life in the service industry. The unfortunate part of that reality is that a lost suit or settlement can sink a service provider financially. Throw legal fees into the mix, and you’ve got all the motivation you’ll need to purchase errors and omissions coverage. Take a proactive stance and protect yourself financially with errors and omissions insurance, so you can focus on doing what you love and providing great service to your clients.
Bow Valley Insurance has proudly served Canadians since 1979, with the experience and skills necessary to find you the best commercial insurance for your unique needs.