Here is a scenario, most consumers do not give too much thought into purchasing an item less than $10. Since this is not a lot of money to invest in a product, consumers do not believe the risks are very high as that amount is not significant. However, when a lot of money is a risk, consumers demand some type of protection from the manufacturer or the professional. One of these protections is known as Errors and Omissions (E&O) Insurance.
Worth noting.. customers and project owners that hire you are well aware of the importance of you having your own insurance. As proof, they may demand you to present them with a certificate of errors and omissions insurance that proves your company is adequately insurance. Your broker or agent can provide this certificate to you once you purchase the policy.
What Is E&O Insurance?
E&O Insurance, also known as Professional Liability Insurance (PLI), covers damages caused by negligence claims and lawsuits. When a client files a negligence claim against a company or professional, the insurance company will initiate an investigation. It is the insurer’s responsibility to determine the validity of the claim.
If the insurance finds in the company’s favor, the plaintiff will have the option of filing a lawsuit against the company. Any company that is familiar with litigation processes know the expense involved. To avoid these expenses, most companies will agree to pay the plaintiff to make the claim go away quietly.
E&O Is A Guarantee
The main reason consumers prefer working with service providers that are covered under E&O Insurance is that it offers a guarantee. If at any time, a customer believes he or she has been harmed due to the negligence of a professional, manufacturer, or service provider, he/she has a right to file a liability claim. These claims can be extremely damaging to everyone involved. But, in most cases, the defendant has the most at risk. This is why E&O Insurance is so important in the business world.
E&O insurance protects professionals, manufacturers, and service providers from monetary damages associated with liability claims and lawsuits. This insurance also covers all or most of civil penalties, the amount of money a judge or jury awards the plaintiff in a civil trial.
With E&O insurance to back them up, consumers can have peace of mind in knowing they are protected from damages caused by negligence. They will have the option of recouping their losses through a civil lawsuit or insurance claim.
To avoid being pulled into a lengthy, expensive civil case, plaintiffs and defendants will oftentimes agree to settle out of court. Fortunately, E&O Insurance also covers out-of-court settlements. Even if the insurance does not cover 100 percent of the settlement, it will cover a large portion of it. This alone could protect the defendant from bankruptcy and other damages caused by the publicity of the negligence case.
E&O Insurance – Relationships Built On Trust
Most service providers take their jobs very seriously. Even if these professionals take all precautions to cover everything, there is always a risk of mishap. Like malpractice, negligence is not intentional but it is harm caused by failure to perform according to the laws and regulations.
Consumers who are aware of these risks, know the importance of E&O Insurance. They know if they are harmed due to the negligence of a professional service provider, they will be protected in many ways. E&O Insurance will kick in when a plaintiff sustains personal injury associated with negligence. It also covers advertising injury claim and property damage. This type of insurance does not cover the public or employees.
In most cases, a business and customer relationship is built on E&O Insurance. Professional service providers who choose not to carry this type of coverage are missing out on opportunities to build their customer base. E&O Insurance protects consumers from poor workmanship, professional negligence, incomplete work, and failure to deliver guaranteed service.
Advertising Damage Protection
All businesses rely on advertising to promote their services and/or products. To achieve the maximum results from a marketing campaign, many of these businesses will hire a licensed marketing consulting firm. Marketing consultants are responsible for putting together a successful campaign. Unfortunately, not all marketing campaigns render positive results.
When a client believes they have been harmed by a paid marketing campaign, they will file a claim with the firm’s insurance company. If the plaintiff does not receive the desired results, the next step will be to file a lawsuit against the marketing firm.
To avoid further embarrassment and expenses, the marketing firm will agree to an out-of-court settlement. If the firm is covered under an E&O Insurance policy, the devastation will only be minor. E&O Insurance, in this case, is helpful to both the plaintiff and defendant. The plaintiff receives a desirable settlement and the defendant is protected from bearing the full amount of the settlement.
Building Credibility One Customer At A Time
There are several ways a professional service provider can establish credibility in Canada. Always being honest, demonstrating empathy, being knowledgeable, having confidence, and delivering on promises are just a few examples of credibility. No matter how hard you try, some consumers will still want more proof. And, that proof is E&O Insurance.
E&O Insurance is the best way to show the community that your business is credible. And, if you want even better results, you can combine E&O Insurance coverage with effective communication, reliable service, and written contracts. This coverage will add more value to your credibility better than any other method.
Other frequently asked questions before buying an E&O Insurance Policy
- What does an errors and omissions insurance policy cover?
- Does my business require errors and omissions insurance coverage?
- What does errors and omissions insurance cost?
- How can I lower my E&O insurance cost?
- How does E&O insurance for independent contractors I work with work?
- What does an E&O Insurance policy not cover?
- What is a certificate of errors and omissions insurance?
- What if I want to cancel my E&O insurance coverage?