Errors and omissions insurance, also known as professional indemnity insurance, is essential to protecting against the cost and impact of legal claims against your business. It’s not a case of if mistakes happen, but when. And when they do, you need to be covered.

Understanding errors and omissions insurance

This type of insurance protects companies, employees, and other associated professionals from legal claims in the event of negligence, wrongful advice, or inadequate work.

Which businesses and professionals need errors and omissions insurance?

Typically, businesses that offer professional advice and services take out errors and omissions insurance. Lawyers, estate agents, accountants, software companies, healthcare companies and professionals are just some of the examples of businesses that take out this form of insurance.

Common reasons why clients could claim against you

Claims come in many forms, and there are so many pitfalls that could land your business in court. Here are a few examples:

Inaccurate advice, negligence, errors in the service provided, missed deadlines, misrepresentation, simple mistakes, a violation of good faith, and many more.

The financial impact of claims

Claims can cost millions and even jeopardize your business due to a simple mistake. Providing incorrect advice to a client can lead to bankruptcy. Compensation, settlements, lawyer's fees, court costs, and other expenses contribute to these significant costs.

Understanding omissions

This is the term used to describe a failure to perform a task or provide the correct information to a client, which results in them losing money. For instance, if an accountant fails to inform a client about certain tax laws. Other examples include failure to perform background checks or failure to get consent.

Is errors and omissions insurance expensive?

Every business is different, and each business carries various levels of risk. The cost of premiums starts at a fraction of the cost compared to the hundreds of thousands or potentially millions in legal costs in the event of a claim. This makes having this type of insurance a no-brainer.

The impact on your reputation

Negative publicity can harm your business significantly. Reputation insurance may mitigate financial losses in such cases.

Every business is different

Your firm or company will have a different client base than the next. Any organisation or business offering advice or services needs the protection of an errors and omissions insurance policy. It’s vital that you find the right policy that’s tailored to the unique needs of your business. Spending some time with your broker ensures that you create the best-tailored insurance policies, whether that’s errors and omissions cover, public liability insurance, business interruption insurance, or whichever type of cover you need. Insurance brokers deal with a vast plethora of insurers, giving you access to the right policies that keep your organisation or business from serious and potentially devastating financial threats.