Errors and omissions insurance, also known as professional liability or professional indemnity insurance, is a type of insurance for professionals whose work errors or omissions can have great legal and financial consequences. An error is a mistake. An omission is the act of leaving something out. For example, a title searcher is responsible for confirming the present owner of a home and ensuring that the home is free and clear of any form of money owed in the form of leans or judgments. This is done to ensure that a house can be sold with no legal issues. If the title searcher overlooks a lean or doesn’t locate the correct owner of the home, the sale of the home could be rendered void. This makes the title searcher liable to be sued by the real estate agent or company and the new homeowner. Most professionals don’t intend to make a mistake but sometimes it just happens. A mistake in some fields can be financially devastating to the contractor, a client and even a third party.
Obtaining E&O insurance will provide a safety net for you to do your job. This insurance is designed to protect you against the financial losses that could surface in legal fees such as attorney fees, reward costs and anything else associated with a law suit brought on by your mistake. If a client sues you, even if you didn’t make an error, you may still have certain legal fees, which can be minimized with this coverage. This insurance ranges from 800 dollars to 200,000 dollars a year depending on the E&O insurance company, the nature of your work, your state of residence and the makeup of your insurance policy.
Errors and omissions insurance is recommended for some professionals and legally required for others. Professionals such as lawyers, engineers, web designers, real estate agents and brokers, and appraisers carry this type of insurance. Any profession that could incur major financial risks due to a mistake is eligible for this type of coverage. If you own a business, you will need to carry your own E&O. If you are employed by a business, your company may provide you with E&O, which you still might want to supplement with your individual policy to ensure you have adequate coverage.
