Insurance Liability And Liability Insurance

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There are many lines of different property and casualty insurances. Even though the general purpose and utilization of these insurances is the same across the nation, prices fluctuate from state to state. We will get into more detail in regards to Errors and Omission Insurance (E&O) in the State of California. Errors and Omission Insurance, also called Professional Liability Insurance or Malpractice Insurance, is used to cover legal expenses caused by potential errors and omissions during operations and stipulation of cases. When a company or firm is sued for making a mistake, performing services in a negligent way or misrepresenting or financially harming a client, the consequences can harm a company in an irreversible way. This is…show more content…
Since E&O insurance is important to carry when running a business most professions have this type of insurance to cover a potential lawsuit that would otherwise cause them to file for bankruptcy. It may come as a surprise that some states do not require businesses to have E&O insurance, but a large portion of contracts with clients required insurance for the contract to be in effect. Having an E&O insurance policy may sometimes be a selling point for potential clients. When a client sees that a business has this type of insurance it gives them peace of mind knowing that if there happens to be any error or omission throughout the process they will be compensated. The same applies to the actual company. It makes it easier to accept new clients and cases knowing that in case of any alleged misunderstanding or disputes, the policy would bring in protection and coverage. According to techinsurance.com about 70% of businesses raise prices or cut hiring when sued and yet, $35 billion = annual out-of-pocket cost of lawsuits for small businesses. These numbers are a clear indication of how important E&O is for a business to operate. Before getting into pricing, perhaps we should take a look at the overall market around the E&O, including how companies are hedging themselves against the possibility of a lawsuit. According to Curtis Pearsall,
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