Errors and Omissions coverage (also known as Professional Liability) responds to claims when a business provides professional advice that is inaccurate or incomplete that leads to a customer’s financial loss, and in some cases, bodily injury and/or property damage. Errors and Omission Insurance covers the damages and defence costs when a lawsuit arises.
Failure to meet the responsibilities or requirements of the business’s profession could result in serious consequences: risking the financial stability of the business and could also jeopardize the business owner’s personal assets.
Instances of Professional Liability include:
Financial Loss: A business provides financial advice, the advice from the business’s professional financial advisor caused a customer to lose his life savings, the customer now seeks compensation from the business.
Having Errors & Omissions coverage will help cover the defence costs that arise from the client’s lawsuit. If the courts found the business liable for their advice provided, Errors & Omissions coverage will also pay for the amount damages awarded to the customer.
Bodily Injury: While a barber is cutting and trimming a customer’s hair, he got distracted and lost grip on the scissors and made a cut on the customer’s ear. The customer suffered from serious bleeding and resulted in multiple stitches. The customer now initiates a lawsuit against the barber for all the medical costs.
With Errors & Omission coverage in place, the insurance company will help cover any defence costs. If the barber is found liable, the coverage will also respond to the amounts of damages awarded to the plaintiff.
Does my business need Errors and Omissions Insurance?
If you provide advice and services in exchange for a fee, this type of coverage may be appropriate for you. Some professions, such as doctors and mortgage brokers, are required by law to carry Errors and Omissions insurance.
Although not all professions are required to carry this type of coverage, it is always recommended to carry it to shield yourself and your business from legal complications.
It is important to note that Errors and Omissions coverage is currently only available for the below industries through Ownr:
Barber Shops
Beauty and Wellness Salons
We are looking to expand this product offering to other industries in the future. If you have any questions or need assistance, you can contact one of our insurance specialists by clicking the chat icon or emailing us at [email protected].