Errors & Omissions Insurance: A Cost-Effective Approach to Protecting Your Business
E&O insurance is supplementary liability insurance that enhances any business owners policy by safeguarding against catastrophic loss in the event of a lawsuit due to a negligent act, error or omission by the staffing organization or its associate employees. In addition to claims of error, omission, or negligence, E&O insurance can also protect against slander, libel and breach of contract.
Who Needs E&O CoverageE&O insurance is appropriate for anyone who gives advice, makes educated recommendations, designs solutions or represents the needs of others. All staffing organizations are exposed, especially those who source professionals, such as accountants, computer consultants, software developers, lawyers, architects, engineers, etc.
E&O Policy OverviewE&O coverage kicks in where your Commercial General Liability policy does not provide coverage, such as for service errors, contract performance disputes or 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.
Most staffing E&O policies only cover the negligent act, error or omission of the staffing organization and specifically exclude the vicarious professional E&O exposures of the associate employees placed at the client company. Specialized forms are also available to cover the professional E&O exposures of the associates while performing duties for the client company.
Policies are designed to cover the large legal defense costs that are incurred while trying to prove liability or innocence. They also cover the final judgment if the staffing owner does not win the lawsuit.
E&O policies generally have both a claim limit and an annual limit. The claim limit is the maximum amount that will be paid for any single event, and the annual limit is the maximum that will be paid in any one policy year. Typical limits range anywhere from $1 million/$2 million to $5 million/$5 million respectively and differ depending on the type of professional placements and client requirements.
Count on the ExpertsThere are many different forms of professional liability insurance and multiple factors to consider when purchasing E&O coverage for your business. Because there isnt a standard policy, an experienced broker who understands the complexities of the staffing industry and your company in particular can knowledgeably design a policy that meets your needs.
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