You strive to provide your clients with expert services and advice. After all, you want to satisfy them and meet their needs. However, there is always a chance that your hard work might not pay off. A customer might claim that you caused them harm. They might even sue you. If they do, then the results could devastate your business. Yet, if you have professional liability insurance, you’ll often have recourse in case of legal action. Here’s a closer look at how this coverage applies to legal action.
E&O in Brief
Professional liability insurance has another common name--errors & omissions (E&O) coverage. This name fits the bill. Coverage will protect you if your professional errors financially or physically harm clients.
This coverage is more specific than the property or bodily injury coverage that general liability insurance provides. It applies in case your direct actions and services cause harm to the client. This coverage usually applies best to professional service providers like lawyers, CPAs and doctors (as malpractice coverage). It will help cover various costs and settlements related to the client’s losses.
Why Suits Arise
Your clients expect your services to benefit them. When they cause harm instead, the clients could sustain personal harm. That could lead to lost money for them. Then, they might decide to sue you to cover these costs. After all, they might hold you responsible for these losses. Therefore, you will have to respond to the suit.
The Legal Costs Your Policy Covers
If you receive a legal suit from a client, immediately contact your attorney for a way forward. Afterward, contact your insurance provider. They can likely tell you whether your E&O policy will provide recourse in this situation. If it does, you might be able to use it for the following costs:
- Attorneys fees
- Damages and settlements awarded to the harmed party
- Certain other costs related to the suit
Most policies will cover clients regardless of whether the suit proves groundless. However, policies will have limits nonetheless.
Your policy likely will not provide any help for claims related to
- Copyright infringement
- False advertising
- Acts of fraud
- Liability risks covered by other policies.
Furthermore, these policies will only apply to the costs incurred from civil lawsuits. They will not cover criminal suits. Therefore, if your company committed a criminal or illegal act, you will likely find that you have no coverage.
Talk to your insurance agent at 888.512.8878 about the benefits of E&O insurance. You’ll likely find it beneficial in a professional setting.