Even the most diligent employee can make a mistake, resulting in a lawsuit. Now more than ever, businesses have a greater need for errors and omissions liability insurance, also known as professional liability. Without this coverage, your business is at risk of being sued for the alleged or actual mistakes of employees.
Professional liability will cover the defense costs of an E&O lawsuit, even meritless claims, protecting an insured for liability expenses incurred that were made either through error or oversight.
Typical E&O allegations include breach of duty, conflict of interest, defamation, execution error, failure to investigate or inadequate investigation, failure to provide a service, fraud, improper documentation, malpractice, mismanagement,
misrepresentation of facts, negligence, unsuitability, violations of state and federal laws, and wrongful death or disability.
Here are 12 examples of good risk management techniques for your E&O exposures1:
- Use checklists, procedures, and manuals to establish standards of care.
- Follow the standards of care established by your profession and/or internally.
- Be straightforward and honest with your clients.
- Never promise more than what can be delivered.
- Keep a record of all contact with clients, especially representation or commitments made to them.
- Offer clients a range of service options, and fully explain each option.
- Never sign your client’s name on a contract.
- Allow clients to make value judgments and operating decisions on their own.
- Admit when you don’t have an answer, then get back to the client with the correct answer later on.
- Disclose and document any business relationships that could be construed as creating conflicts of interest.
- Carefully scrutinize advertising for inaccuracies and “false promises.”
- Ensure that your support staff is properly trained.
To schedule a risk management audit of your errors and omissions (E&O) liability exposures, contact McGrath Insurance Group at 800-342-3859 or visit www.mcgrathinsurance.com.
*This article is written for informational purposes only and should not be construed as providing legal advice.