Oops! We’ve all done it at some point in our lives. We make a mistake while serving a client. Mine cost me a little over $2,000 in penalties to the Internal Revenue Service for failure to file an extension on a partnership tax return. Not a good day.
Errors and Omissions
Errors and Omissions insurance is one of the sub-types of professional insurance. It generally compensates the damaged party due to a professional error or proper oversight of the project. Typical professionals that purchase this insurance include lawyers, accountants, engineers, and surveyors.
Insurance is a risk reduction tool used in our private and business lives. It is founded on the basic premise that a large group of individuals will cover a catastrophic event for one of the members sometime in the future. In general, the insurance company uses actuarial science (law of large numbers) to calculate the financial cost of accidents over a given period of time.