Errors and Omissions Insurance (E&O) is a form or professional liability. Sometimes, E&O is even only called professional liability. This insurance protects a practice whether medical or law, from claims of negligent advice or negligent medical surgeries and procedures (Errors).
Alternatively, the problems can arise if a person fails to render advice, a surgery or a procedure (Omissions). This coverage is for doctors, laws, financial advisors or any other profession that deals with clients and gives them advice or renders medical treatments and procedures.
You can also check my other post on Medical Malpractice Insurance Q&A here.
Q1: What business/practice usually buys an Errors & Omissions Insurance policy?
A1: Any business/practice that provides advice, services to a client. This could even be a pastor or a nurse as they give advice and/or care for patients too.
Q2: Is it against the law not to carry an Errors & Omissions Insurance policy?
A2: In most states, it is not required for a practice to carry an E&O policy, but as a professional in your selected field, this much is expected of you from your patients. A healthcare professional can be found liable and face substantial financial losses without this coverage. If you are sued, your business assets might be liquidated to cover the cost of litigation. If you are a newer practice, this could cripple your business before you ever get a chance to get off the ground.
Q3: Why do I need Errors & Omissions Insurance policy when it is already built into my General Liability Insurance?
A3: There is a misconception out there about E&O policy and that it is a coverage that is already packaged up with your General Liability policy. This is not true. E&O is considered a specialty insurance coverage and never has been a part of the basic General Liability policy. They are two separate coverages.
Q4: What if I get sued for an Errors & Omissions Insurance issue and lose the case? Will I have to tap into my personal bank account to pay any settlements?
A4: Only if you did not have E&O insurance would you have to come out of pocket to pay costs associated with being sued. You’d have to pay for a lawyer, court costs and a hefty settlement claim that must be paid to the victim.
Q5: I just found out my employer at the practice I work at has an Errors & Omissions Insurance policy already. Why would I need it if they assured me I’m covered under their policy?
A5: Great question. If you are a healthcare professional and your employer has a policy, then you are covered because an E&O policy does extend to the employees… However, the question you should ask yourself is to what extent are you covered under that policy? Your boss’ policy was designed by them and their agent to protect their best interest. This policy was not designed specifically to protect you. If you had your own E&O policy, that policy would be tailored to your needs. If sued, the policy would provide you with a lawyer to fight any claims against YOU. Therefore, it is definitely an advantage to having your own E&O policy.
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