But how can you protect your business if you provide a service and a mistake causes financial loss for someone else? This is where a product called Errors and Omissions coverage fills the protection gap. Twenty years ago, Errors and Omissions coverage wasn’t on everyone’s radar but in today’s highly competitive and often highly litigious world, it’s become a common element.

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Ottawa - September 4, 2012 - Years ago I worked for a boss who used to say “It’s okay to make as many mistakes as you want…just don’t make the same mistake twice.” While the sentiment that you’re allowed to make mistakes and then learn from them is nice, when it comes to the services that your business provides for others, most clients won’t be that forgiving if your mistakes cost them money.

At some point, everyone and every company is going to make a mistake. Either we do something that we shouldn’t do or we don’t do something that we should have done. That’s life. We already are accustomed to the thinking that our mistakes could hurt some “body” (bodily injury) or some “thing” (property damage) and most businesses purchase a Commercial General Liability insurance policy which protects them in those instances. But how can you protect your business if you provide a service and a mistake causes financial loss for someone else? This is where a product called Errors and Omissions coverage fills the protection gap.

Twenty years ago, Errors and Omissions coverage (often referred to simply as “E&O”) wasn’t on everyone’s radar but in today’s highly competitive and often highly litigious world, it’s become a common element in many business’s insurance portfolios.

Basically, E&O reimburses you if your company is named in a suit alleging that your services (or lack of services) caused a financial loss to a client. For example, let’s say you run a printing company and you’ve been hired at the last minute to print a brochure for an upcoming fundraising event. You assure the client that your team can handle the job but your company accidently gets the event’s date wrong and the event organizers are left without any promotional material. Hardly anyone shows up at the fundraiser and the organizers blame you for their financial loss and take legal action against your business to recoup what they consider to be their losses.

Now, they may or may not have a real case against you but the fact is that you now have to defend your business and that’s expensive. Lawyer’s fees, professional fees and other defense costs all add up very quickly. After weeks of wrangling, even if you win your case and don’t have to pay a settlement, you would still be out many thousands of dollars. E&O takes care of that hassle and typically covers your defense costs along with court settlements or judgments.

If you provide any type of service for a fee or if you make something which if it fails to perform may not cause property damage but could cause a financial loss, then E&O should be considered as part of your overall protection strategy. With the proper coverage in place, you’ll know that the next time your company makes a mistake, it won’t necessarily be your last.