Professional Liability (Errors & Omissions) Insurance

When it comes to protecting your business, most of us are well aware of the importance of insurance. The coverage helps to protect your business assets when problems arise.  Professional liability insurance may not be the first policy you think of when setting up shop, but it is a crucial piece of your security.

Also known as errors and omissions insurance (E&O), professional liability should be part of your overall insurance plan. At Lake Region Insurance Agency, we can handle all of your company’s policy needs. Let’s connect today for a free review of your coverage.

What Is Professional Liability Insurance?

This type of insurance is essential for businesses that earn money by selling services or advice. 

For example, here are some businesses that should have a professional liability policy:

  • Insurance Agents
  • Law Firms 
  • Consultants
  • Business Coaches
  • Financial Advisers
  • Talent Representatives  
  • Real Estate Agents
  • Wedding Planners
  • Medical Providers (called medical malpractice insurance)

Professional liability insurance protects the company and its workers if there are claims of negligent advice or inadequate work. As an example, a financial advisor could face a lawsuit if an investment goes sour. 

Even if they follow all guidelines, and even if the client acknowledges the risks, a claim can still happen. In most cases, courts or arbitration panels will rule in favor of the business. But hefty legal fees will still mount for the company.

What You Need To Know

E&O insurance is a little different from most other policies, so there are some things to keep in mind.

1. It helps pay legal fees.

The primary purpose of E&O insurance is to help businesses recover the costs of legal battles in the event of a lawsuit. This includes court costs, as well as settlements up to the limit of your policy.

2. It will not cover costs for criminal prosecution.

Professional liability insurance does not protect you against criminal investigations or lawsuits. This policy is in place for civil suits.

3. It only covers claims for the life of the policy.

If someone files a claim against you for work you did before the policy was in place, then you don’t have coverage for that incident. So be sure you have coverage from your first day in business. 

4. It may not cover temporary employees.

One of the most common gray areas in these policies is around temporary workers. If you rely on a temporary workforce, for example, around tax time, be sure to talk with your agent about this.

Do I Need Errors and Omissions Insurance?

Any company whose primary business is to give advice or provide service should consider taking out a policy. In many cases, this insurance is mandatory since some regulatory bodies require it. Company investors may also make it required. The risks of going without an E&O policy are too high.

Let Us Help

Here at Lake Region Insurance Agency, we can help you find the perfect E&O policy for your company. As independent agents, we can work with a wide range of insurance companies across the industry. Call or stop by one of our Greater Minnesota offices for a free consultation. You will be well on your way to protecting your business. 

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