E&O Insurance is Essential for Working Professionals
Because we live in an increasingly litigious society, the chances of getting sued for professional liability are even greater now than ever. However, most small businesses are not aware of their need for this coverage, the only way to mitigate the risks of such litigation. Business owners often question whether New Jersey errors and omission liability insurance applies to their situation.
Every business needs to have property insurance (which pays for fire damage to a building), general liability (for damage committed to someone else’s property), and workers’ compensation insurance (that pays legal fees if workers file a suit for injuries).
Errors and omissions coverage offers protection from a civil lawsuit settlement arising from an implied faulty business practice resulting in fines or penalties.
The Scope of E&O coverage
E&O is a limited insurance category designed to protect against professional errors. In medical circles, it’s widely known as malpractice insurance. A professional error is considered a risk that takes place in any business environment. For example, shipping a customers order to the wrong location, providing or selling software that causes a customer’s computer systems to break down, or hiring a subcontractor who causes damage while performing a routine plumbing job.
There is an infinite number of possible professional errors, many of which may cause a customer to sue for any damages or losses. The benefit of an E&O policy is that it offers protection across a spectrum of legitimate professional errors, and even protects against frivolous lawsuits by paying for any legal costs incurred.
Who Needs E&O?
Practically all businesses face some type of professional liability risk. For the majority of small businesses, perhaps the need isnt so great, but for most professionals it is essential coverage to have. That’s because the legal system in the US tends to punish professional error with award judgments often in the millions. Even with a favorable judgment, there’s still the question of paying the legal fees.
Remember, a single unfavorable ruling in court can shut down the vast majority of businesses that lack coverage. A New Jersey errors and omission liability policy is the best line of defense you can have.