Errors & Omissions insurance covers your company, or you individually, in the event that a client holds you responsible for a service you provided, or failed to provide, that did not have the expected results or outcome. It insures you for errors or omissions that you have made or that the client perceives you have made.
Errors & Omissions policies usually cover the cost of damages incurred by your client as well as claim expenses. Even if the charges against you are found to be groundless, it can be very time consuming and expensive to defend a lawsuit. These costs can bankrupt an individual or small company and leave a lasting effect on the bottom line of larger firms. An E&O policy can cover judgments, settlements and defense costs.
E&O insurance should be obtained by registered investment advisors, financial planners and insurance brokers. It is often required by regulatory companies such as FINRA or the company investors.
In the financial industry, lawsuits happen regardless of how baseless the claims may be. Clients will sue an advisor or broker after an investment goes bad even if the risks were known and within the established guidelines. If a court or arbitration panel finds in favor of the broker or advisor, legal fees can still be extremely high. This is why Errors & Omissions insurance is vital. In short, E&O coverage provides protection for you in the event that an error or omission on your part has caused a financial loss to a client.
In addition to financial firms, there are many other business that should obtain E&O insurance coverage. These include law firms, architects, engineering companies, technology providers, advertising and public relations firms, wedding planners, media companies and any internet related businesses.
If you provide a service to your clients for a fee, you most likely have E&O exposure and need this coverage. You should consider what would happen if the service is not done correctly or on time and costs your client money and/or harms their reputation.
It is best to consult with Berkely Brokerage Corp. to determine if you have an E&O risk. To put it simply, everyone makes mistakes. Even with the best employees and risk management, no one is perfect. The best time to buy an E&O policy is before the risk is taken. If you are in a service industry, make Errors & Omissions insurance a part of your insurance portfolio.
Give us a call today with any questions you have and let us provide you with a comprehensive and competitive insurance plan.