If you’ve built a business for yourself, or spent years establishing a reputation in your industry, it is essential that you take the necessary steps to protect it. A simple mistake or the slightest bit of complacency can result in a lawsuit that has the power to take everything away. As a professional in a position of financial expertise, the advice you give can potentially make or break a client. As a professional in a position to provide services to customers, your name is tied to your product. This is why E&O insurance is critical to have something to fall back on should a hairy situation arise.
What Is E&O?
Errors and omissions insurance is a type of professional liability insurance specifically designed for professionals in fields where mistakes can easily be made that can cause indirect harm or financial strife. Professional consultants and financial advisors will almost always have this type of insurance for their practice. In fact, many firms actually require their employees to carry this type of insurance to protect the parent company if there is a claim against them. The insurance protects the company, the employee, and potentially the reputation of both. The cost of defending against a claim is covered or significant lowered, and if the plaintiff is proven to be in the right, any damages awarded to them are covered by the E&O insurance as well.