Errors and Omissions Insurance

Anyone can make mistakes these days, and if you own a business in Alberta, there is a good chance you could be sued for your mistakes or those of your employees. Errors and omissions insurance is designed to protect you against these mistakes, so you can stay in business and not have to pay out a lot of money in damages, as a result of errors. Take James for example.

directors and officers liability insuranceJames was a successful electrical contractor and started out as an electrician trainee many years ago. He employed 16 people and recently won a bid on a major construction job to perform residential wiring for an apartment building. One day, one of his workers installed a new electrical panel but accidentally put in a double 50 amp circuit breaker where a double 30 amp breaker was supposed to go, for the laundry circuit. This essentially left the circuit unprotected to conditions like overload.

Unfortunately, no one noticed the error and as time went by, the project was completed and people moved into the building. Then one night, a fire started in one of the apartments (caused by a clothes dryer motor that overheated). After a fire investigation, they discovered that the 50 amp breaker did not protect the dryer motor from overloading and this is what caused the fire (A 30 amp breaker would have tripped, avoiding the fire). All this pointed to the error in installation by James’ employee.

James’ company was responsible for damages in excess of $50,000 to the building. However, he was also sued for a million dollars by the people that were injured in the fire. Had James checked his policy beforehand, he would have seen that his policy would only pay $100,000. Since James could not pay the remaining balance on the settlement, he could not stay in business. If only his insurance agent had explained the importance of having enough E&O insurance for his business.

Questions about Errors & Omissions Insurance? Visit our Errors & Omissions page, or talk to your broker at Leibel Insurance today!

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