Errors & Omissions insurance is not just a good idea, it is a requirement for many professionals and businesses. Also referred to as professional liability or malpractice insurance, E&O insurance provides protection for professionals and companies against legal claims if they do something they should not have or fail to do something that they should have. It will generally cover legal fees to defend against a claim, and financial relief to cover a settlement or judgment up to the limits of the policy. While it is easy to see the necessity for this type of policy, what is actually covered, and to what extent, depends on the policy itself. That can vary quite a bit between insurance companies. There are a number of considerations to make when obtaining insurance for yourself or for your business. To help you along, we have identified three important things to look at when buying an E&O policy.
First, it is essential to work with a knowledgeable agent or broker who understands your business. You will be much more likely to get a policy with everything you need, and nothing that you don’t need, when the person you are working with is familiar with your industry and your company. What limits do you need? Are your subcontractors covered? Are temporary employees covered? Is the policy retroactive for mistakes that have been made in the past but haven’t been discovered yet? How far back is it retroactive? These are components of an E&O policy that will vary from policy to policy or between insurance carriers. A good agent will know the right questions to ask you so that your coverage is appropriate for your business.
Another essential item is customer service. How long does it take to process a claim and how helpful are they when you have a claim? Do the salespeople answer the phone right away, but the rest of the company is voicemail only? One thing you can do is call the claims number before you buy the policy and see if they answer. Check online ratings and look for complaints registered against the company. If there are a number of horror stories you may want to look at a different insurance company. You don’t want to find out about awful customer service when it’s too late. Of course, if you found a reputable agent already, chances are that they work for an ethical company that handles claims appropriately. They would not generally provide you with a policy from a company with poor customer service, but this can sometimes be a reason for less expensive premiums. Ask your agent about how well the insurance company responds to questions and how they are with overall communication. Choose a company that has people available to answer questions and that can advise you regarding claims. Trying to deal with a difficult insurance company can be a real drag and take up a lot of time.
Finally, do your homework. Choose a company that shows integrity in its affairs. What kind of reputation does the company have? Your broker or agent should be able to help you comply with insurance requirements. Contact other companies that you do business with and ask who they recommend. An insurance firm that understands your profession or industry will have a good track record with businesses that are like yours. Get quotes from more than one broker and see what they have to say. Compare them. If the second broker verifies everything the first broker told you, that is a good sign. You will be the most comfortable once you can feel secure in the knowledge that you made a good decision and the best decision is an informed one.
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