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You have general liability insurance. You have property coverage. Maybe you even have a Business Owners Policy (BOP).
So your business is covered if someone sues you…right?
Not necessarily.
Some of the claims that can be especially expensive for a business fall outside the coverage provided by a standard BOP or Commercial General Liability policy.
Two important examples are Errors & Omissions (E&O) Insurance and Employment Practices Liability Insurance (EPLI).
These aren’t always automatically included—or even brought up—when a business insurance policy is quoted. But when something goes wrong, they can make a BIG difference.
Let’s look at a couple of real-world situations.
Scenario #1: Your Client Says Your Mistake Cost Them Money
Imagine you own a professional service business.
You complete a project for a client, but a few months later, you receive a letter from an attorney. The client claims your company made an error that caused them a significant financial loss.
You disagree. You believe your team did everything correctly.
Here’s the problem: You still have to respond to the lawsuit.
That can mean hiring an attorney, gathering documentation, responding to legal deadlines, and potentially spending thousands of dollars defending your business—even if you ultimately did nothing wrong.
This is where Errors & Omissions Insurance, also called Professional Liability Insurance, can come into play.
Depending on your business, an E&O claim could start with something as simple as:
- A consultant gives advice that a client claims resulted in a financial loss.
- A bookkeeper makes an error in a client’s records.
- A technology company misses an important project deadline.
- A marketing company publishes incorrect information for a client.
- A contractor or service provider is accused of failing to deliver what was promised.
- A client simply believes your professional service didn’t meet the agreed-upon standard.
For a covered claim, an E&O policy can help with attorney fees and other defense costs and may help pay covered settlements or judgments, subject to the policy’s terms and limits.
Perhaps just as importantly, the insurance carrier can help manage the claim and legal process instead of leaving the business owner to figure it out alone.
Scenario #2: A Former Employee Files a Complaint
Now imagine a different situation.
You have an employee who has repeatedly been late, missed deadlines, and received several warnings. Eventually, you decide it’s time to terminate their employment.
A few weeks later, you receive notice that the former employee has filed a complaint alleging discrimination or wrongful termination.
You may have documentation showing exactly why the employee was terminated.
But again, you still have to respond.
Employment-related claims don’t only happen to huge corporations with hundreds of employees. Small and midsize businesses can face them, too.
Situations that could potentially lead to an employment practices claim include:
- An employee claims they were fired unfairly.
- A job applicant alleges they weren’t hired because of discrimination.
- An employee claims a manager or coworker harassed them.
- Someone alleges they were passed over for a promotion for an improper reason.
- An employee claims they experienced retaliation after making a complaint.
- A former employee disputes the circumstances surrounding their termination.
Employment Practices Liability Insurance (EPLI) is designed to help businesses respond to certain employment-related allegations.
For a covered claim, EPLI may help pay defense costs and covered damages or settlements, subject to the policy’s terms, conditions, deductible, and limits.
Without it? Your business may be paying those legal expenses itself.
“That Would Never Happen to My Business.”
We hope it doesn’t!
But there’s something important to remember about both of these examples:
You don’t necessarily have to do something wrong to have to defend yourself.
A customer can make an allegation.
A former employee can file a complaint.
A disagreement can turn into a lawsuit.
And once that happens, the question isn’t just whether your business was actually at fault. It’s also: Who is going to pay to defend your business?
That’s one of the reasons these coverages can be so valuable.
Why Aren’t These Coverages Automatically Included?
This is where business insurance can get confusing.
Many standard commercial insurance policies are built around risks such as someone getting hurt at your business, property being damaged, or your business accidentally damaging someone else’s property.
Professional mistakes and employment-related allegations are different exposures.
That’s why E&O and EPLI often require intentional placement as part of your overall insurance program.
If no one talks to you about them, it’s possible to renew your business insurance year after year without realizing the gap exists.
Until there’s a claim.
Don’t Wait for a Legal Notice to Review Your Coverage
At Blue Marsh Insurance, we don’t think reviewing business insurance should simply mean asking, “Can we find a cheaper policy?”
We want to understand what could actually create a significant financial problem for your business.
Do you provide advice or professional services? You may need to consider E&O.
Do you have employees? EPLI deserves a conversation.
There may be other exposures unique to your particular business, too.
The goal isn’t to buy every insurance policy available. It’s to understand your risks and make an informed decision about which ones you’re willing to take—and which ones you’d rather transfer to an insurance company.
If it’s been a while since you’ve taken a closer look at your business insurance, let’s talk.
The Blue Marsh Insurance commercial team can review your current insurance program, identify potential gaps, and help you determine whether coverages like E&O and EPLI make sense for your business.
Because the best time to find a gap in your insurance is before you need the coverage.
Contact us by calling 610-590-0152 or by requesting a review here.
A little more about Blue Marsh Insurance…
When he founded Blue Marsh, Tom Davenport wanted to create a different kind of insurance company. One that’s built on personal relationships and a local presence. One where you, the customer, feel more like a friend.
As an independent insurance agency, Blue Marsh Insurance represents a carefully selected group of financially strong, reputable insurance companies. Therefore, we are able to offer you the best coverage at the most competitive price.
If you’re interested in starting a quote online or having us take a look at your current policies, click here!