E&O insurance policies are a specialized type of small business insurance designed to protect business owners against potential liability in the event that a mistake is made leading to damages. E&O insurance policies are particularly useful for professionals, such as accountants and lawyers in Westerly, but can be applied to many other industries, such as technology. Nevertheless, many small business owners may have misconceptions regarding how E&O insurance works. Here are a few of the most common misunderstandings.
1. Myth: There Is One Type of Errors & Omissions Insurance
There are different types of E&O insurance depending on your industry -- a particularly common type is medical malpractice insurance. You will need to get an insurance plan customized to your work, so you should always consult with an insurance professional serving Westerly before you make a decision regarding your plans. Your industry impacts what is covered and how expensive this type of small business insurance is.
2. Myth: E&O Insurance Can Protect Against Anything
Malicious or intentional actions are not covered under E&O insurance; it has to be negligence. Thus, if it can be shown that the professional knew that the advice or actions they took would have a negative impact on the client, E&O insurance may not apply. There are also certain exclusions that can apply, such as operating outside of the parameters of your industry or services.
3. Myth: Only Some People Need E&O Insurance
E&O insurance isn't just necessary for doctors and lawyers in Westerly. Any time an individual acts in a professional capacity -- whether they are a real estate agent or an accountant -- there is the possibility that they could find themselves potentially liable for a mistake. Errors and omissions insurance acts to protect individuals from acts of unintentional negligence or accusations related to these acts. It's a critical type of small business insurance for that reason.
4. Myth: You Only Need General Liability
General liability insurance usually isn't going to cover the same things errors and omissions insurance does. Usually it just covers physical accident protection, not any issues that could occur due to potentially faulty or negligent advice. You should review your Westerly general liability insurance carefully to determine what is included in your coverage.
5. Myth: E&O Insurance Isn't Needed for Consultations
Professional grade consultations can still incur liability even if you aren't offering the advice as a professional or if you aren't a professional within your field. Just saying that something is "advice" is not enough to absolve you of legal liability if you are speaking to a client that you have in a professional capacity. Rhode Island small business owners can better protect themselves from accidental skips with the use of this type of small business insurance.
6. E&O Insurance Is Only Required If You Make a Mistake
Some professionals believe that they don't need E&O insurance because they aren't going to be making any mistakes. E&O insurance still usually kicks in if you are defending yourself against having made a mistake -- even if you didn't actually make one. There can still be legal fees and other costs associated with these accusations which won't be covered by other small business insurance policies.
Errors and omissions insurance provides another level of protection against individuals who could potentially find themselves on the other side of a costly lawsuit. For more information about errors and omissions insurance policies and other types of business insurance, contact your local friendly insurance agency serving Westerly, RI today.
This material is for informational purposes only. All statements herein are subject to the provision, exclusions and conditions of the applicable policy. For an actual description of all coverages, terms and conditions, refer to the insurance policy.