Pennsylvania Errors And Omissions Insurance
A Cost-Effective Approach To Protecting Your Business
It's a good news, bad news situation. The bad news: Lawsuits, once a measure of last resort, are now commonplace in settling disputes. The good news? You can protect yourself, and your business and reputation, by investing in professional liability coverage, also known as Errors and Omissions (E&O) Insurance.
E&O Insurance is supplementary liability insurance that enhances any business owner's policy by safeguarding against catastrophic loss in the event of a lawsuit due to a negligent act, error or omission by the professional. In addition to claims of error, omission, or negligence, an E&O policy can also protect against slander, libel and breach of contract.
Who Needs E&O Coverage?
Curious as to who would need E&Errors and Omissions Insurance, and why they would want this protection? Robertson Insurance & Risk Management asks you to think about these situations:
Real Estate Errors & Omissions
Buyers of a property contended that misrepresentations were made regarding its square footage. The allegations were that the property was listed by a real estate agent as having 1,682 square feet when, in fact, it was only 1,352 square feet. The buyers made a monetary demand against the real estate agent for the diminished value of the property resulting from the square footage discrepancy.
An auto parts distributor ("the client") hired a management consultant to evaluate and make recommendations to improve staffing, budgeting and executive decision-making. The consultant subsequently implemented a reorganization strategy. The strategy redefined management's roles, implemented spending controls and introduced a new staffing model. Eighteen months after the reorganization, the client alleged that the new strategy ultimately resulted in a negative impact on profitability. The client sued the management consultant for negligence, seeking compensatory damages and lost profits.
Not Meeting A Client's Expectations
A software company manufactures and distributes workforce management software that allows third parties to track employee hours, overtime, vacation time and compiles information for payroll processing. The software company enters into an agreement to provide the software to a customer, including implementation, installation, customization, training and support services.
Situation: Six months after installation, the customer is not happy with the performance of the software program, specifically alleging a functionality failure. The customer agrees to allow the software company a six-week period to cure the default.
Challenge: After this time period elapses without a satisfactory resolution, the customer terminates the contract due to negligence and failure of the product to perform as intended. Damage allegations were in excess of $700,000. Claim expenses: $50,000 Damages: Settled for $250,000.
A systems integration company provides hardware and software integration services.
Situation: When uploading a new software program for a customer, a malicious code is inadvertently transferred to the customer's network, causing widespread loss of data and disruption to the customer's operations. In the download process, the virus spreads to the client's computer system, resulting in widespread loss of data and a computer network shutdown.
Challenge: The customer seeks damages for the costs to reconstruct the data, as well as the financial impact associated with the disruption of business operations. Resolution Claim expenses: $35,000 Damages: $400,000.
It is appropriate coverage for anyone who gives advice, makes educated recommendations, designs solutions, or represents the needs of others. Service professionals, such as accountants, computer consultants, software developers, planners, architects, real estate agents, contractors, etc., are prime candidates for carrying E&O Insurance.
Specialized forms of E&O coverage are also available to professions such as appraisers, real estate agents, insurance agents, home inspectors and notaries. Policies are designed to cover the large legal defense costs that are incurred trying to prove liability or innocence. They also ultimately cover the final judgment if the business owner does not win the lawsuit.
E&O Policy Overview
E&O coverage kicks in where your commercial General Liability Insurance policy does not provide coverage, such as for service errors, contract performance disputes or any other professional liability issues. These policies also include defense costs, which can be quite substantial even if liability is not found. Policies typically do not provide coverage for non-financial losses or for intentional or dishonest acts.
Count On The Experts
There are many different forms of professional liability insurance and multiple factors to consider when purchasing E&O coverage for your business. Because there is not a standard policy, Robertson Insurance & Risk Management - your local, experienced, professionals - understands your company and can knowledgeably design a policy to meet your needs. Begin protecting your professional reputation today! Contact our experts to learn how E&O Insurance fits into your total risk management program.