Lawsuits can devastate a business. Beyond the enormous legal expense, litigation can cripple professionals’ ability to focus on running their enterprises. Errors and omissions insurance can protect a business accused of making professional mistakes. To get the most value from an E&O policy, it pays to know what to look for.
Understand Your Coverage Limits
Along with monthly premiums and deductibles, most insurance buyers typically focus on the aggregate limit, the most a policy will pay for a term. Since a company can be sued more than once in a policy term, it is equally vital to know the E&O policy’s per occurrence limit, the maximum amount covered for a single claim. With coverage limits decided, the next task is grasping the details of a legal defense.
Understand How Your Legal Defense Would Proceed
If your policy features a “duty to defend” clause, the insurer hires the legal team and decides whether to settle or go to court. For a small business, this is highly desirable. Large companies with longstanding law firm relationships may prefer “duty to indemnify” coverage. This clause permits a business to run its legal defense with the insurer reimbursing costs.
E&O coverage can ensure a business’s survival. Finding an insurance agent with the knowledge, patience and ability to custom-tailor your E&O policy is worth the effort.