Many local insurers can provide coverage for professionals who require more than just a General Liability policy. Commonly referred to as an errors and omissions (E&O) policy, professional liability insurance covers you for errors (or omissions) that you may have made or that your client perceives you have made during the course of performing your duties.
An important aspect of this coverage is that it pays judgments, settlements and defense costs levied against you. Even when the allegations are found to be groundless, you can still end up paying thousands of dollars to defend against the lawsuit. This could easily bankrupt a smaller company or individual and is likely to have a lasting effect on the bottom line of a larger company.
Most professionals understand the need for E&O insurance
Mistakes and mishaps are a common occurrence for many businesses, but few may experience the type of financial damage that many professionals face. Those who can benefit the most from having this coverage are doctors, lawyers, accountants, architects, engineers, etc. Other individuals that could find themselves embroiled in a costly lawsuit range from advertising agencies to commercial printers, Web hosting companies to wedding planners, and the list goes on.
For anyone whose primary business is providing a service to their client for a fee, they will certainly have some type of an E&O exposure. For instance, if the services you have provided are not done correctly or on time, but it then ends up costing your client money or harms their reputation, this could then result in litigation.
Even with the best employees and sound risk management practices in place, sooner or later mistakes will be made. A company in the freight forwarding business could misread a label and send a shipment to the wrong city, or Country, and because it is a time sensitive shipment and the client ends up losing out on a sale, they will expect that company to pay the loss.
Add to this the damage to the reputation for both, the professional and his client, and this could be a bad situation all around, resulting in the loss off future contracts with the current client as well as any future clients. This is the type of risk or exposure that shows why it is best to have professional liability insurance coverage at all times.