It seems like more and more people are turning to litigation to deal with any problems that might come up between a client and a business. It doesn’t matter how frivolous the claim, people seem determined to take a company to court and get some kind of compensation out of it. If this happens to you or your company, Errors and Omissions insurance can keep you protected.

When a customer takes you to court over any errors or failure to complete the work that was stated in the contract, Errors and Omissions insurance can cover your costs. Contract performance disputes can be very detrimental to a company, but if you have a good insurance policy, you are much more likely to survive it.

Insurance like this is applicable to almost any business, but it is perhaps most useful to companies in the service industry. Any company that offers a service for a fee is open to have the final quality of that service questioned. Without the tangible proof of a finished product, many clients will turn to litigation when they feel they are not getting the full value for their money.

Errors and Omissions insurance in the service is very much like malpractice insurance for the medical industry. The fact is that sometimes things go wrong in these industries, despite your best efforts to make sure everything worked smoothly. In these instances it can be a great comfort to have something to fall back on.

And sometimes there are situations that are just out of your control, and no matter how much effort you put into finishing the task or job as it was outlined in the contract, it just can’t be done. It might be because of an underperforming employee, or a debilitating accident on the job. The thing to remember is that while it may not have been your fault, that doesn’t mean the customer won’t seek compensation. Will you be ready for it?

You can find a different Errors and Omissions insurance policy to fit your own individual needs, and you should make sure that the coverage is right for you. You might find that there are too many addendums and caveats, or they might be leaving out some intrinsic elements you need. Either way, take the time to understand a policy and make sure that it will properly protect you.

You should also be sure that your policy will cover everything from a possible judgment against you to the court fees and lawyer costs that will inevitably add up. It doesn’t matter how baseless the claim is, if you go to court, it will still cost you a lot of money, so be sure that the policy covers all these costs. It should also protect you whether the error was made by full time, W2 employees or 1099 subcontractors.

Many companies, however, don’t have sufficient Errors and Omissions insurance. After all, they haven’t been sued so far, so why bother? But all it takes is that one litigious client to make serious trouble and maybe even cost you your business. Get this insurance in place and you won’t have to worry about it.