Errors & omissions (E&O) insurance is a type of liability insurance that protects businesses from claims related to professional mistakes. Inadequate or incomplete work, poor advice, delayed delivery of products or services and other negligent actions all constitute examples of “errors and omissions.” Lawsuits brought over these types of mistakes can be very costly for nearly any organization; fortunately, E&O insurance provides assistance in these situations. So, how much does errors and omissions insurance cost?
Factors Affecting The Cost Of Errors & Omissions Insurance
According to Insurance Business Magazine, as many as one in seven insurance workers will face an issue related to E&O claims at least once during their professional career.
Insurance Business Magazine also estimated that the average cost to a professional of resolving such claims was $22,000, excluding the cost of hiring an attorney. However, the total cost of errors & omissions insurance for your company depends on several factors. Here is a close analysis of four of these factors.
Number Of Employees On Staff
The more employees your organization has, the higher your E&O insurance premiums will likely be. Assuming you wish to provide coverage to all of your workers, the amount you pay for errors & omissions insurance will not be the same if you have 50 employees rather than if you had 25 people on your staff.
If your company employs a large number of people, it’s particularly important to verify that your insurance brokerage offers an errors & omissions insurance policy that addresses your unique needs and concerns.
Geographic Location
In addition to the size of your organization, its geographic location will also often impact the cost of errors & omissions insurance coverage. Insurance premiums vary across states; therefore, if your company is located in New York, it will likely not pay the same amount for E&O insurance as a similar organization in Illinois or Texas would.
Additionally, insurance costs can often vary depending on a business’s more specific location. For example, if your organization is based in a major city, such as New York City, Chicago or San Francisco, it may likely face different costs than a company located in a suburban or rural area.
Total Revenue
The total revenue your company earns each year will also affect how much you pay in errors & omissions insurance. This is factored in because more money often entails a higher risk of lawsuits. In other words, the more your organization earns from selling its products or services, the more money an upset client may seek to receive in compensation after filing a claim over negligence.
If this is the case for your company, attorney’s fees and other legal costs alone could add up to several tens of thousands of dollars.
Industry-Specific Risks & Industries
Every industry is vulnerable to certain types of risks. For instance, a construction company may make mistakes that result in injuries to employees or property damage. A surgeon or other medical professional may commit an error or omission that results in an injury to a patient and leads to a medical malpractice lawsuit. Meanwhile, an attorney or financial advisor may give misleading advice to a client about a case or an investment decision.
According to a study by bizinsure, the three industries with the highest averages for E&O premiums were financial services, recruitment and engineering/architecture. All of these industries had average premiums of over $800.
Additional Factors To Consider
Other factors that could affect your errors & omissions insurance costs include your claims history and employee hiring and training practices, including your workers’ experience levels. According to Trusted Choice Insurance, a majority of small businesses typically pay between $1,000 and $3,000 in yearly premiums per $1 million worth of errors & omissions coverage.
Speak To A Seasoned Errors & Omissions Insurance Broker
Reach out to the experienced business insurance brokers at Pro Insurance Group in Elgin, Illinois for more information on the average cost and benefits of errors & omissions insurance. Our brokerage consists of a group of brokers who are dedicated to serving as one-on-one advocates for each of our clients, regardless of their unique coverage needs and budget. We always aim to form and maintain long-lasting relationships with our clients.
With Pro Insurance, common E&O insurance coverage includes court costs and attorney’s fees, administrative costs and settlement fees. Our policies do not, however, cover intellectual property theft, general liability claims that cause injuries or illegal acts. Nearly any business, regardless of size, will benefit from errors & omissions insurance coverage although, insurance agencies, law firms, real estate companies, financial services firms and medical services organizations are especially recommended to carry this type of protection. Call Pro Insurance Group today at 833.619.0770 or contact us online to request a quote.