Potential Costs of Forgoing Errors & Omissions Insurance
Many professionals question whether they should take out Errors & Omissions insurance or simply save money in the short run by avoiding the E&O insurance cost. Although the initial savings may be tempting, it’s crucial for professionals to understand the costs that people who lack E&O insurance coverage may face.
Investigation and Defense
If even one claim of professional negligence arises, the cost of simply investigating the claim and mounting a defense against it can be significant. It doesn’t matter if the professional is ultimately cleared of any wrongdoing; the person who brought the claim is not liable for paying back the professional’s legal costs. The risk of unfounded or fraudulent claims alone makes E&O insurance a smart investment.
If damages are actually awarded, the cost can be crippling for most professionals. This is especially true for professionals such as architects and engineers, who create final products with a very high value, or professionals such as lawyers and consultants, who provide advice with significant financial and legal ramifications. Most professionals risk losing personal assets or being left unable to meet their obligations if they are ordered to pay damages.
Save With a Protective Policy
For virtually every professional, the total E&O insurance cost is highly favorable when compared with the cost of facing a claim without coverage. Professionals who currently lack E&O insurance should consider addressing this gap quickly, before they are exposed to significant financial losses.