Realistically speaking, all professionals in the business world make mistakes. Even with the best-trained employees, and while implementing the best risk management practices, mistakes will eventually be made. After all, no one is perfect, and that’s why NJ errors and omissions coverage is such an essential product.
Whether a freight forwarder sends a shipment to the wrong location, or a wedding planner schedules the caterers and entertainers on the wrong date, if the client loses out and ends up with a financial loss due to the error, the responsible party will likely be sued for damages. An errors and omissions (E&O) policy helps to pay for those costs.
When should you purchase E&O?
Obviously, the best time to buy an E&O policy is before any risk is being taken. Being in the service industry, you have probably come to realize that you will have these exposures sooner or later, so you really need to make E&O insurance a part of your insurance portfolio.
Many of the contracts that you’ll go into with clients will require this form of insurance to be in place. In some cases, it’s even a good selling point with your clients. It helps them to relax and also gives them the peace of mind of knowing they will be compensated in the event that there is an error or omission in the services you provide.
Besides, by not purchasing an NJ errors and omissions policy a company can be taking a severe financial risk. Another important thing to remember is that these types of losses are not covered under a general liability policy. And even if you can prove that you are not at fault, the process involved in litigation is time consuming and quite expensive.
Not every E&O policy is the same. Some policies include the defense expenses within the limit of liability, while some will exclude punitive damages. The wording of these policies can vary greatly, and each policy should be read carefully to make sure the coverage fits the exposure.
That’s why it’s important for retail agents to find specialty insurance professionals that understand the E&O coverage along with the marketplace. Different information may be needed depending upon the types of exposures you may actually be facing.