Do you own a business where clients or customers rely on your talent, skills, education or training? You could face an errors and omissions (E&O) lawsuit if you do.
An E&O lawsuit is essentially a malpractice suit brought by someone who’s unhappy with or alleges that they suffered harm from your work. Someone can file an E&O claim for any number of reasons.
Common reasons for E&O claims
Most E&O claims arise from one or more of the following:
- A mistake or oversight
- An undesired outcome
- Breach of contract
- A misunderstanding
A misunderstanding can be at the heart of many E&O claims. These conflicts often result when a professional and their client weren’t on the same page regarding the agreed-to service and the finished product. Misunderstandings are more likely to arise when there’s not a clear, detailed contract or work order in place.
It may be possible to negotiate a resolution to the claim with the unhappy customer. Sometimes, it just takes a little extra work to make things right — even if you’re sure you followed the client’s instructions and they simply changed their mind.
Why E&O claims can be expensive
Sometimes a client will allege financial or other harm for which they’re seeking compensation. If you’re a plumber and your customer accuses you of installing a faucet incorrectly and causing a flood in a customer’s kitchen, then they’ll likely demand that you pay for the resulting damage.
If you have E&O insurance, then your insurer will likely get their attorneys involved in negotiating a settlement. If it goes to court, they’ll defend you. You may want to consult with an experienced law attorney who can let you know what steps to take if you don’t have this insurance, though.
An attorney can also provide you with guidance on any insurance you may need to protect yourself from the devastating impact that lawsuits can have on your business and reputation.