A Tale of Forms: Errors & Omissions Insurance Paperwork
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Paper has been valuable in our economy for a long time now. The Chinese invented paper money sometime around the 11th century; bills of exchange were used by almost all merchants in Europe during the Middle Ages; and by the 1700s, banknotes were the preferred form of currency for everyone.

Today, we are surrounded by important pieces of paper: cash, checks, order forms, contracts, and (of course) insurance policies. Running a business increasingly means pushing lots of paper, whether tangible or virtual.

So let's explore a few important documents that protect your small business, starting with an Errors and Omissions Insurance application.

Where It Begins: The Errors & Omissions Insurance Application

Errors and Omissions Insurance (aka E&O, Professional Liability Insurance, or Malpractice Insurance) steps in when a customer who is unsatisfied with your work sues your business. It pays for your lawyer's fees, settlements, and judgments — all of which would otherwise cost you some serious paper.

But to get this protection, you'll need to fill out an insurance application, which will ask you about the following:

  • Your business's composition, including payroll, revenue, number and types of employees, and details about owners and executives.
  • The relationships your company has with other businesses, including clients and subsidiaries.
  • Your business's contracts and internal policies.
  • Your commercial insurance and claims history.

Check out "Small-Business Owners: What to Expect When You Apply for Errors & Omissions Insurance" for a more detailed explanation of the E&O application process. Or, if you're ready to get started now, fill out an online insurance application.

What Documents Do I Need to Fill Out the E & O Application?

The following documents will come in handy when completing your E and O application:

  • Recent balance sheets and projections for the next fiscal year.
  • Form contracts and modified contracts you use with your largest clients.
  • Insurance policies or Certificates of Insurance for the coverages your business already carries.
  • Payroll sheets and documents detailing executive compensation.
  • Your business's ownership interests in other companies.
  • The documents legally registering your company as a corporation, LLC, etc.

Certificate of Liability Insurance: A Document That Wins Clients

When you obtain E&O coverage for your small business, you can request to receive a Certificate of Liability Insurance (here is a sample Certificate of Liability Insurance for your reference).

The certificate isn't a contract. Rather, the document…

  • Is a handy one-page form that outlines your E&O coverage details, such as the contact information for you and the insurer, deductibles, policy limits, and a description of the scope of your coverage.
  • Acts as proof of insurance for clients and other business partners who require you to carry E and O Insurance, which allows you to land contracts you otherwise couldn't.
  • Strengthens your clients' trust when you list them as Certificate Holders, which means they get updates if your coverage lapses or changes.

See "What an Errors & Omissions Certificate of Liability Insurance Does for Your Small Business" to learn more.

Your E&O Policy: The Document That Safeguards Your (Small) Empire

Your E&O policy is a complex legal document that specifies the exact parameters of your coverage. The policy consists of the following parts:

  • Declarations. This section of your policy is similar to a Certificate of Liability Insurance. It succinctly lists the basic details about your coverage and your insurer's contact information.
  • Insuring Agreement. This contains the legalese defining your relationship with the insurer.
  • Conditions. These are prerequisites you and your insurer must follow for the coverage to be effective.
  • Endorsements. An "endorsement" is just an insurance-industry word for an amendment to your policy that changes or adds to the underlying agreement.

When you receive your E & O policy forms, make sure you completely understand them, and contact your insurance agent to discuss parts you're unsure about.

E&O Insurance: Further Reading

E&O Insurance in the Insureon Blog