Errors And Omissions Insurance California
It took a lot of hard work for you to be able to open your small business, and you would like it to last for the rest of your life. Because it is a very real possibility that an error could lead a customer to bring a lawsuit against you and your business, the dreams that you have for your future could go up in flames at any time. This is why you must purchase errors and omissions insurance.
What Is Errors and Omissions Insurance?
Errors and omissions insurance protects your business from lawsuits that your customers may bring against you because you made a professional mistake. The insurance provides the money for your legal bills in the event that you need to defend yourself in court. If you do not have real estate errors and omissions insurance, for example, you may have to close your real estate agency after the court decides in favor of the plaintiff.
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Why Is Errors and Omissions Insurance Necessary?
If you do not have errors and omissions insurance, one lawsuit can mean that your business will have to close forever. If you spend thousands of dollars and your client decides to drop his or her claim, it wouldn’t necessarily mean that your business can stay open. If you were to lose the case or you decided to settle, you would need to pay a significant amount from your personal savings. That is the best reason to see errors and omissions insurance brokers for an E&O policy.
Errors and Omissions Insurance protects you against claims filed for the following:
- Inaccurate advice
- Violating the good faith and fair dealing rule
- Misrepresentation
- Omissions
- Errors
- Negligence
Who Needs to Purchase Errors and Omissions Insurance?
If you do the following in the performance of your duties, you need errors and omissions insurance:
- Advise clients
- Make educated recommendations
- Design solutions
- Represent clients’ needs
Professionals of this type include veterinarians, pet groomers, printing and publishing establishments, hair salons and barbershops, consulting companies, website developers, marketing firms, educators, advertising firms, engineering firms and engineers, and accountants.
Errors and omissions insurance will cover several expenses, including the following:
The Cost of Your Attorney – This would be a very costly expense that could possibly be enough to force you to close your doors after the court case is over. It could be the case even if you and your client come to an agreement in the shortest amount of time. Your errors and omissions insurance would cover these costs up to the limits of the policy.
The Court Costs – Lawsuits require that you pay several court costs, including administrative costs, underwriting charges and the cost of filing documents.
The Settlement – You and your client may decide to forgo the lawsuit and settle the matter outside of court. Your attorney will inform you of the amount of money you would be required to pay the client.
The Judgment – Your case could also go to trial, and you may lose in court. You would be required to pay the amount that the judge or jury awards the plaintiff. If not, a lien would be placed against the assets in your business.
The Cost of Errors and Omissions Insurance
The price of errors and omissions insurance is specific to each individual business, so the price of your E&O policy will be different from the price that your neighbor pays for his policy. When you consider the price of your E&O coverage, you must also consider the price that you may have to pay in the event that someone sues you. In that case, the cost of the premiums would be a welcome price to pay if you can protect your business from lawsuits.
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