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Are You Protected with Errors and Omissions Insurance?

Errors and Omissions Insurance

The right contractors’ insurance can mean the difference between an effective business and bankruptcy from liability concerns. No matter how safe your practices may be, no matter how careful you are to abide by OSHA standards, accidents happen on the job site. In fact, they happen all the time. It pays to have the right coverage available so that when the unthinkable occurs, you are covered. This includes errors and omissions insurance.

General Liability

General liability insurance should be carried by every business owner. It is, in fact, required by law. Its intended purpose is to protect you from unexpected injuries and accidents that happen on your business premises or as a result of you conducting business. When someone falls off of a ladder, has a car accident in your lot, falls through a wall on the job site, or even accuses you of slander, general liability kicks in.

Free General Liability Insurance Quote

There are, however, situations in which general liability does not protect you. This is where errors and omissions insurance becomes so important.

Errors and Omissions

This kind of coverage applies when you employ independent contractors, consultants or advisors who make mistakes and cause you liability issues. If, for example, a consultant gives bad advice to a customer which ends up disastrous, the customer can come back and file suit for it. Having this kind of insurance coverage will protect against litigation and out of pocket settlements.

For example, if you had the option to remove a tree from a property and fail to do so, then the next week a storm knocks that tree over to damage a home, this form of coverage will greatly lessen your liability issues and defend you against the costs of litigation.

Not the Same

At a glance, it can look like general liability is the same thing as error coverage. While both cover you and reduce litigation costs in the case of unforeseen occurrences, this is where the similarity ends. Liability covers contractors whose employees have accidents, or who are faced with lawsuits from others being injured on the business premises or job site.

Errors and Omissions insurance, on the other hand, is specifically tailored to independent consultants, advisors and the like who provide advice and indirect support to job sites. If a worker falls off of a ladder, liability covers it. If a structure collapses because of an architectural defect, error coverage will be necessary. If falling debris hits a pedestrian, you’ll want liability. If a structure collapses because an advisor had you build it on uneven ground, you will need error coverage.

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Commercial General Liability vs Errors and Omissions

Accidents happen. So often, in fact, that we have a phrase that basically allows us to try and convince ourselves that it’s okay. We try and rationalize it to ourselves: “Hey, this accident just happened, and it was totally not my fault, so I’m going to say this in order to try and make this other person not feel.” Or you perhaps even, “That accident was totally my fault… I didn’t mean to hit that support on the deck with a sledgehammer… but accidents happen!” Either way, accidents do happen, and when they come up it pays to have them covered, which is where general liability coverage and errors and omissions coverage can help.

General liability is there for those unexpected accidents that occur on your business premises. Whether someone falls down the stairs, a customer damages his car in your parking lot, or even if someone believes you have slandered or defamed their character; general liability has got you covered.

Free General Liability Insurance Quote

If you are a contractor working on a job, and one of your employees falls from a ladder and lands on top of a third party (a neighbor walking his dog, for example), and the third party is hurt in the collision, general liability will cover the injured person’s medical care. It also covers you if one of your employees accidentally smashes a sledgehammer through a wall that was not supposed to be a part of the kitchen re-model.

Errors and Omissions insurance covers those professionals that act as consultants or give specialized advice or care. When they give bad advice, a customer could come back and sue them for damages. However, errors and omissions insurance protects them from having to take care of the litigation and settlements out of pocket.

Contractors who are consulting on a project (accountants, financial planners, interior designers and landscape architects) should more than likely have errors and omissions insurance. Suppose that you are a landscape architect doing a job, and you decide not to get rid of a gigantic willow tree on the property that’s leaning a little bit too close to the house. Next week, when it winds up crashing through your client’s living room, they’ll be looking for someone to blame. Errors and omissions insurance will lower your liability risks and protect you from unnecessary litigation.

A lot can go wrong on a construction site, and the better coverage you have the less you will have to worry about accidents when you are on the job. General liability insurance and errors and omissions insurance can help limit your losses and the risk of serious lawsuits that could damage the future of your company.