3 Real Errors and Omissions Suits Where Insurance Saved the Day
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3 Real Errors and Omissions Suits Where Insurance Saved the Day

Errors and omissions suits can tank a small business – unless it has insurance. If you're sued and have a policy, you just contact your insurance provider for claims guidance and financial help. Your Errors and Omissions Insurance typically pays for your defense and legal costs.

However, plenty of small-business owners don't think an errors and omissions suit could actually happen to them. They might have read about small business insurance and know what could go wrong, but lawsuits always seem like the kind of thing that happens to other people.

The truth, though, is that small businesses can be sued just like any other business.

Need more convincing? Here are a few real-life instances where E&O Insurance would have protected a business owner from huge legal costs.

Errors & Omissions Claim #1: $5 Million Lawsuit over Square Footage

According to ABC News, a luxury real estate agent was sued over a disagreement about the square footage at a Malibu property. The report notes a $12 million home was listed as 15,000 square feet. The purchaser claims the actual size is closer to 10,000.

Why the disagreement? The real estate agent included garage areas and outdoor living spaces. The real estate agent won the initial case, but lost an appeal. Now the California Supreme Court will hear the case. If you're keeping track at home, that's three times this dispute will go before a court. By the time a final ruling has been made, the agent will likely have paid tens of thousands of dollars in legal fees. And that doesn't include any damages they might owe.

Errors & Omissions Claim #2: Model Sues Beauty Salon for $1.5 Million

Women's Health Magazine has the story of an aspiring model suing a New York hair salon that gave her a terrible haircut. Except the haircut wasn't just terrible, it's that it was painfully bad. Literally.

While "treating" the model's hair, the hairdresser apparently used bleaching chemicals that were so strong they burnt her scalp and caused her hair to fall out. The model claims that the scarring (emotional and physical) pushed her into depression and set back her modeling career.

Errors & Omissions Claim #3: Architects Sued over Fatal Ventilation Problems

Chicago Artists Resource details how one architectural firm was sued in the 1990s for poor ventilation that may have contributed to an art teacher's death. The report notes the silk screening fumes couldn't flow out of the art classroom because of improper ventilation. The art teacher developed leukemia (presumably from chemical exposure) and her estate filed a negligence lawsuit against the architectural firm that designed the classroom.

What's the takeaway from these three cases? They highlight the wide variety of lawsuits that an E&O Insurance policy would cover.

If one of your employees makes a terrible mistake (like burning someone's scalp with bleach), or you disagree with clients about a valuation (à la the real estate dispute), Errors and Omissions Insurance can help pay for lawyers to defend your business in court and cover any damages you owe clients.

E&O Insurance: Further Reading

E&O Insurance in the Insureon Blog