Can I Do Business Without Errors and Omissions Insurance?


When budgets are tight, it’s easy to second guess a business expense that’s not of immediate use. This is especially true with certain types of coverage, such as Errors & Omissions (E&O) insurance that’s designed to protect against accusations of negligence or the failure to perform your professional services. It’s easy for some small businesses to dismiss it, instead opting to try and avoid making mistakes. However, E&O insurance is not a luxury you can afford to do without. Your general liability policy will not cover you or your business if you make a professional mistake that results in financial harm to your client.

E&O insurance is a policy that covers you and/or your business in case a client did not get the results they expected or desired from a service you provided (or failed to provide). If you’re sued by a dissatisfied customer, an E&O policy will cover your legal defense, plus any settlement or judgment against you in court.

Every business that provides a service has the potential for costly error. A graphics firm could produce ads for a concert with the wrong date, leading to thousands in losses. A web developer could fail to update a client’s website accurately, resulting in lost business and a decline in professional reputation. Doctors, lawyers—almost any kind of service provider runs the risk of being sued for negligence if they don’t do their job perfectly.

Keep in mind that even a frivolous claim can tie up both your time and money in court until the issue is resolved. This type of financial hit can be deadly to a growing business. And the truth is, even the most dedicated professional can make a mistake. A good policy can help keep an honest error from spelling the end of your business.

Like every other kind of insurance, you must have Errors & Omissions coverage in place before you need it—you cannot buy it after you’ve been sued. If you don’t have it, now is the time to sit down to discuss coverage with your insurance broker and discuss your options.

Stearns and Co. has the experience you need to protect your business with an E&O policy tailored to your exact needs. Contact us today for a comprehensive consultation.