Commercial insurance is all about managing risk. You know that you need to protect your business against lawsuits, for example if someone injures themselves on company property, or against disasters like fire or theft. But not all damage is physical and not all claims are made by outside parties. There are situations when you need error and omissions (E&O) insurance or employment practices liability insurance coverage. So let’s take a look at what these policies cover and how they differ.
It’s easy to imagine a construction site needing liability coverage in case of injury, or a supermarket having a policy that covers someone slipping and falling in their store. These types of accidents would be covered by a general commercial liability insurance. Product liability insurance covers a product failing or injuring someone. All of this is damage that we’re used to hearing about. But what about injuries that you can’t see?
If your business provides advice or services to clients, then you probably need professional liability, or errors and omissions insurance. In the past, these two terms were different: professional liability insurance was for professionals like doctors or lawyers (more like malpractice insurance), while E&O was for semi-professionals like accountants or financial advisors. Now we use these terms interchangeably.
While general commercial insurance would protect a business against claims of bodily injury or property damage, E&O protects you against claims that your advice caused a financial loss to your client, or that your services were:
- Never completed
- Full of mistakes
- Not delivered as promised/never completed.
This can extend beyond financial losses to include things like a hairdresser making a mistake while coloring a client’s hair and damaging it. It can also sometimes include physical injury, such as a dentist making a mistake (malpractice), or even a personal trainer giving advice that leads to strained muscles or a bad back.
All of the above is related to clients or customers making claims against your business. But how do you protect yourself against claims that come from your employees? Employment practices liability insurance provides coverage for employers against lawsuits brought by current, former, or even potential employees. Just as you have a responsibility to keep customers safe, or provide your clients with the best possible service or advice, you also have a responsibility to treat all employees and people you may hire fairly.
This type of insurance kicks in when there are claims made alleging
- Wrongful termination
- Sexual harassment
- Invasion of privacy
- Mismanaging benefits
- Breaching employment contracts
Remember, though, this type of insurance will cover owners, managers, and other employees in case a claim is made against them, but will not cover anyone that has knowingly acted illegally.
The world of commercial insurance can be a confusing one, filled with all sorts of letters floating around and all kinds of different policies that cover different people and different scenarios. It is important to assess your needs and make sure you have the right protection. Remember, general commercial liability doesn’t cover everyone and everything, and you may need to supplement your policy with things like E&O and EPLI.
If you need help making sense of the alphabet soup of insurance, we’re here to help! EZ.Insure will set you up with your own personal agent, and no one will ever hound you with endless phone calls. These agents know their stuff, and will make sure you get exactly the coverage you need. And we’ll do it all for free! To get started simply enter your zip code in the bar above, or you can speak to an agent by calling 888-615-4893.