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The Importance of error and omissions for businesses

Everyone needs insurance coverage in Prescott because frankly, things happen. It’s easy to understand the reasons for obvious types of coverage such as auto, home, and life insurance. Things happen when we conduct business, such as mistakes, or maybe a misconception about what a client expects and what is actually delivered. Mosaic Insurance is here to explain why you need insurance for when the unexpected happens in business. It’s often defined as E&O insurance. It covers you for errors (or omissions) that you have made, or that the client perceives that you made.

   

E&O insurance covers judgments, settlements and defense costs. It provides protection if an error is made on your part and it costs your client a significant amount of losses. It’s also known as Professional Liability Insurance and Malpractice Insurance.

 

Who needs it?

Doctors, lawyers, accountants, architects, engineers, advertising agencies, commercial printers, Web hosting companies, wedding planners, and anyone who is providing a product or a service.

 

Some examples of mistakes that can be made are as simple as a wedding planner booking dates with the various venues for the weekend before the actual wedding takes place – OOPS! How about a shipment that is delivered in South America rather than South Africa – OOPS! The mistake is more than an ‘oops,’ it’s the cost of your reputation and personal losses of the client. Then, there’s the possibility that the incident is not your fault at all, but your client believes otherwise. E&O coverage is something you need to cover litigation costs.

 

The best time to buy E&O insurance is now before any more risk is taken. Also, make it a point of telling your clients that you have E&O coverage. It’s a good selling point and gives them peace of mind knowing they will be compensated if something goes wrong.

 

Here is a checklist to go through to see if coverage is right for you:

•    Claims made, or claims made and reported – Are they made within the policy period?

•    Is there a retroactive date? – The farther back, the more coverage

•    Does it include defense expenses?

•    Does it include punitive damages?

•    Does it offer coverage on business consultants (even if they are with a separate organization)?

•    Have there been claims against you in the past?

 

Mosaic Insurance in Prescott has a few suggestions for anyone in business, and they are common sense:  Always have a written contract that spells out what will be done, what will not be done and what the fees will be. Communicate throughout the job and keep the expectations realistic. Have quality control procedures in place and use internal and external audits to check them. To learn more about how to protect your business call 928-458-7374 to speak with an agent.

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