Errors and omissions (aka malpractice) claims are complaints people file when they feel your small business has not provided services to an acceptable professional standard. You may have already read in our post "What is malpractice?" that you don't actually have to make a mistake or violate a professional standard in order to be sued. So who are the people behind these complaints?
In short, anyone who doesn't work for your business can file an errors and omissions claim against your business if they feel they've been negatively affected by your work.
Clients and Customers: The Faces of Errors and Omissions Lawsuits
Because errors and omissions claims revolve around the type of work that you do, it makes sense that the people who pay for your services are the ones filing these claims. Take a look:
- Clients. If you are an engineer, real estate professional, or someone else who uses contracts and / or provides services, your clients can file errors and omissions claims against your business. Take a look at this recent case, reported by silive.com, involving a famous architecture firm and the New York City borough of Staten Island. The city's Construction Authority filed a $1.4 million lawsuit against Ennead Architects (the firm that designed former President Bill Clinton's presidential library), alleging that their defective design caused a recently constructed playground to crumble.
- Customers. If you own a business that provides services to customers, know that they can sue you if they feel your work is not up to par. The Huffington Post recently reported on a lawsuit against PetSmart regarding a grooming incident. An English bulldog puppy was allegedly strangled during a grooming session at the store. The business called the dog owners to report that the dog was vomiting blood. The pet owner took the dog to the vet, but it died shortly thereafter. The pet owner rejected a $2,000 check from PetSmart and filed a $25,000+ lawsuit instead.
Learn more about these types of lawsuits by reading our post "Understanding errors and omissions (malpractice) lawsuits."
And remember: adequate errors and omissions insurance can help you pay for these claims – even if they turn out to be unfounded.