Mackay Insurance Blog
What Is an Errors and Omissions Insurance Policy & Why Do You Need It?
You work hard to make your business succeed. You take pride in your work ethic and the services or products you provide to your clientele.
From this perspective, it can be hard to wrap your mind around the need for errors and omissions insurance coverage.
You have the best of intentions. Your attention to detail is stellar. You hire with care and select your vendors with equal care.
Yet mistakes still happen.
Even worse, not everyone you work with may be quite so devoted to your company's ideals as you are. An errors and omissions insurance (E&O Insurance) policy is there for both the perils you can imagine and those you can't.
Keep reading to have your business liability insurance questions answered! We also offer free errors and omissions business insurance quotes here!
What Is Errors and Omissions Insurance?
If you read that post, you probably remember that one of the products we always recommend to our business clients is errors and omissions insurance.
This insurance product is specifically designed to protect you in two sets of circumstances.
1. When honest mistakes happen.
What is an example of an honest mistake? Let's say someone on your team misses a critical typo in a time-sensitive campaign for one of your clients.
Whether the campaign goes to print and causes your client to lose face with their customer base or the campaign has to be redone and causes delay and loss of sales, you may find yourself faced with an expensive lawsuit.
There are a myriad of scenarios that could occur from one small error or oversight (omission). But errors and omissions insurance protects you from both!
2. When dishonest actions occur.
This is a situation too many honest business owners fail to even consider. You have integrity and high standards and you assume everyone else does too.
Here is an example. Let's say you entrust a team member or vendor with funds to purchase high-end supplies to create your products. But they use the funds to purchase inferior supplies, pocketing the difference.
Your product malfunctions or even causes harm to your clients. The lawsuits start pouring in. You are now potentially on the hook for refunds and damages.
This is a frightening - and all too common - situation where you will find errors and omissions insurance invaluable.
What Types of Industries Can Benefit from an Errors and Omissions Insurance Policy?
Does your company produce products for sale or resale?
Are you in the service business, providing:
- Legal or financial guidance,
- Public speaking,
- Pet sitting, or
- Child care?
Can you see any point from origin to delivery of your products and services where an honest mistake or deliberate omission might potentially occur?
If you answered yes, your business could benefit from errors and omissions insurance protection.
However, there are certain types of industries where taking out E&O insurance is especially warranted and encouraged.
Sometimes these are called the "softer" industries because the product being provided is actually in the form of a service delivered through a human being.
Even with the most meticulous attention to detail and scrupulous employee training, service-based businesses can be particularly vulnerable to mistakes of interpretation.
Here are some examples of industries where E&O insurance is especially necessary:
- Legal and attorney services.
- Financial planning guidance.
- Tax planning and preparation.
- Advertising and marketing.
- Public relations.
- Coaching (life coaching and business coaching).
- Writing, editing and journalism.
You get the idea. When you and your team essentially ARE the product, you are especially vulnerable to financial harm arising from honest errors or deliberate omissions.
Evaluating Your Business's Need for Errors and Omissions Insurance
If you are just now launching your business or are still in the hectic and messy startup phase, it can be hard to envision the need for errors and omissions insurance.
Heck, you are still trying to figure out exactly what you do, how you do it, what works, what doesn't and where your trajectory might take you!
But this is also the phase of your business life cycle when you are most vulnerable to even small errors and omissions. A small misstep at this stage could shut your doors forever.
Here at Mackay Insurance, we guide our business clients to build a firm foundation from day one. Sure, you may be small potatoes in your industry now. But when you take your potential and your dreams seriously, you don't let your imagination stagnate there.
So much of the early days of any business entity are about making mistakes, learning from those mistakes and trying again. Each time, you get stronger, smarter, better than you were before!
That is if you don't go under from a lawsuit from one of those missteps.
At large, stable, well-known companies, this process of evaluating risk and putting protections in place against that risk is known as risk management.
In small, fledgling, start-up ventures, this process is called errors and omissions insurance coverage.
Right now, you just need to know you are protected, and not just from the “oopses” you can imagine or anticipate. You need protection from all the learning curve moments, perils and pitfalls you can't even begin to imagine or anticipate.
Errors and omissions liability insurance is there in your corner to ensure your dream business makes it through its infancy, terrible twos, preteen and teenage years so it can become a big, bold, force to be reckoned with.
Napanee and Belleville Clients Trust Mackay for Their Business Liability Insurance Needs
Mackay Insurance is a provider of choice for small, mid-sized and large businesses in and around the Belleville and Napanee areas.
Not sure what insurance products and coverage levels best fit your business life cycle stage? Worried about how to budget for the insurance your business requires? Your friendly Mackay Insurance broker can help you find the insurance policy that works best for you and your business!
Visit us online for free business insurance quotes or give us a call at 888-853-5552.