Errors and Omissions insurance, otherwise known as E&O insurance is a common option for insurance coverage for many businesses. The term E&O gets thrown around a lot and might be confusing. Think of it along the lines of liability insurance for your business. Like malpractice insurance for a doctor, the insurance basically covers losses if someone does something wrong on the job.
1. Determine if you need E&O insurance. Any company or individual that provides a service should consider obtaining Errors and Omissions insurance. In the event the service turns out in default somehow to the point where a customer has a problem with the service, any damages or liability costs will be covered.
2. Do not waste time getting E&O insurance. The best time to get insurance is when your business is first starting out. Dealing with even one customer puts you and your company in financial risk if something unplanned happens. If you are part of a company that has been fortunate enough not to have run into any problems like this yet and you do not have E&O insurance yet, it is not too late to get the insurance.
3. Inquire about E&O insurance. Contact your insurance company and begin the process of getting insurance. The insurance company will ask questions about your company and the services you provide. They will discuss with you the amount of coverage you would like to obtain. In the end, they will provide you with a price quote for you to have E&O insurance. Give the agent the best and most thorough information you can on your business to make him or her feel comfortable insuring you and giving you the best possible price quote.
4. Get the right wording. There is no standard wording or generic E&O insurance coverage. Each company's E&O policy is specifically written to fit that particular company. It is important that the policy writer understands the area of your business in order to write the best policy. To get the best E&O policy, find an agent that specializes in your field. As you are presented with policy information, read over it thoroughly to make sure all the wording is correct.
5. Pay attention that all the services you offer are covered by the policy. There is a company out there that will insure your company in its entirety.
6. Consider the prior-acts coverage section. Some policies only cover claims made within the period of coverage. Other policies will cover claims made of allegations that occurred prior to the beginning date of coverage. These policies that cover outside the dates of coverage can offer limited time coverage or protection for all prior acts. None of these coverages are bad. You just have to choose the one that works best for your company and make sure it is written accordingly in your policy paperwork.
7. Opt for innocent party coverage. Innocent party coverage will cover your company, even in your innocence if an employee or helper defaults and the responsibility gets pinned on you even though you were unaware of the negligence. In such instances, it truly is better to be safe than sorry.
source : http://www.wikihow.com/Buy-Errors-and-Omissions-Insurance