With so many insurance policies out there, you might be unsure if you need professional liability, directors and officers (D&O), or employment practices liability (EPLI insurance). Depending on your business practices, you may need one or all three. Understanding the differences between each policy type is the first step in securing the right coverage.
Key Differences Between E&O, D&O, and EPLI Insurance
A basic package policy can cover most risks you may face as a business owner. But commercial general liability coverage can contain gaps in coverage that leave you vulnerable to financial loss. If a client slips and falls on your premises, general liability insurance has you covered. But what if you fail to deliver a home inspection report by a set deadline? Or if your CFO misrepresents your company’s profits to an investor, leading to a lawsuit? What happens if an employee sues for wrongful termination? General liability won’t cover you in any of these scenarios.
E&O, D&O, and EPLI insurance coverage can fill in the general liability coverage gaps that threaten your business. Every business should consider if they are susceptible to lawsuits not covered in their general liability insurance and purchase additional coverage accordingly.
Errors and Omissions (E&O) Insurance
Errors and omissions insurance, also known as professional liability insurance, covers the liability related to a service you provide. Those that need E&O insurance include real estate agents, accountants, insurance professionals, consultants, architects, engineers, and any other occupation that provides a service to clients. When clients are dissatisfied with the service they receive, they may choose to file suit. E&O coverage pays for lawsuit costs and damages if a client sues for negligence, missed deadlines, unfinished work, or errors.
Directors and Officers Insurance
Senior-level employees of a company face unique risks due to their job status. If a company goes under due to financial mismanagement, lenders can go after the directors and officers of a company and blame them for its downfall. D&O insurance protects individuals from business-related lawsuits alleging their misconduct, misrepresentation of company assets, or financial negligence. Any business with a board of directors can benefit from D&O coverage, and it can help attract high-level employees to join the company.
Employment Practices Liability Insurance (EPLI)
While directors and officers insurance covers an accused company executive in employee lawsuits, EPLI insurance covers the whole company in the event of a lawsuit alleging discrimination, sexual harassment, failure to promote, wrongful termination, invasion of privacy, and other employment-related misconduct. Because of the various federal laws regulating employment practices, a company is vulnerable to litigation if it unintentionally violates an employee’s legal rights. EPLI coverage is often coupled with D&O coverage to form a management liability insurance policy.
Make Sure You’re Covered
Don’t wait till after you’ve been hit with an uncovered claim to purchase E&O, D&O or EPLI coverage. Speak with our experts to learn if you have gaps in your coverage.
Now that you know the difference between E&O, D&O, and EPLI insurance, you still may be wondering if you really need any of these coverages. There is no one-size-fits-all insurance solution for all businesses, so it’s necessary to evaluate your risks to decide what coverage you need.
If your work is service-based and you can imagine a scenario in which an unhappy client files suit, you probably need E&O insurance. And if your high-level employees are susceptible to individual lawsuits, D&O is an excellent option to protect their interests. Any company with employees can benefit from EPLI insurance because employment-related claims are on the rise.
Still Unsure If You Need Coverage?
Southpoint understands that you have a lot on your plate as a business owner. We can take care of finding the right insurance coverage for your business so you don’t have to. Our team of insurance experts knows how to identify your unique business risks and can help you determine if you need E&O, D&O, or EPLI insurance to keep your business safe.
Southpoint partners with the best insurance companies, and we will advocate on your behalf to find top-notch coverage that fits your budget. Learn more about our carrier partners and contact us today to learn why business owners trust Southpoint with their insurance needs.