Human Error is Unavoidable. E&O is the Solution.

Errors and Omissions Insurance (E&O or professional liability) is a critical step in protecting your restaurant. If an employee makes a mistake while working, it’s on the business owner. Claims for mistakes or misrepresentation can cost hundreds of thousands of dollars, putting even the most careful restaurants out of business. And let’s face it, mistakes do happen. For this reason, insuring your business with E&O insurance can protect you from possible slip-ups and mishandlings on behalf of your employees.

The Unique Benefit to Restaurants

Restaurants, bars, and cafes, especially those in fast-paced urban markets, tend to overlook the importance of errors and omissions insurance. However, high staff turnover, quick table turnover, and demanding clientele can lead to unintended mistakes by employees. Read below to learn about all the ways E&O can protect your business.

Protect Against Employee Mistakes

Aptly named, errors and omissions insurance insures a business against potential damages associated with any error or omission made while providing a professional service. Scenarios like these can happen one of two ways. First, an employee may forget a significant step toward the completion of contracted work (omission). Second, a client claims that the work was done incorrectly (error). Your business could be held liable for any damages due to negligence or breach of contract. Not all clients will pursue legal action, but it is better to be safe than sorry. Protecting your growing business against the risk of a costly lawsuit is the safest choice.

Shield Your Business From Lawsuits and Legal Fees 

With humans at the core of everything you do, your business is forever at risk for human error. These errors may cost your clients money, which they could attempt to recover from you via a lawsuit. Whether it’s an error in judgment or an oversight by a manager, employee, or subcontractor, E&O covers claims related to such mistakes. What’s more, E&O drops legal fees to a fraction of the original cost.

To make sure you have no gaps in coverage to lawsuits, you should know your policy’s termination date. But keep in mind the retroactive date of inception or “prior acts coverage date”. This retroactive start date is the day that your business first purchased E&O insurance. If coverage remains continuous, then your business stays protected. These policies are usually written on a claims-made basis, which covers claims made during the policy period.

Dangers of E&O Policy Lapse

If you choose not to renew your E&O policy and it lapses, however, your business could open itself up to liability months or even years after an alleged mistake was made. Should a client trace a financial loss back to a mistake made by your business, even if the policy was active when that mistake was made, you could be liable. If your policy is no longer in force, you would have no coverage for the lawsuit.

As with all insurance policies, there are limitations to the coverage available under E&O insurance. Your policy will only cover mistakes made in good conscience. It will not cover any damages resulting from purposely misleading acts, purposely erroneous acts, or willful misrepresentation. Furthermore, your coverage does not extend to property damage, bodily injuries (including on-the-job injuries), or management issues regarding money and employees.

Avoid the potential costs of such mistakes. Find the right E&O policy for your business. Leave it to the insurance experts at Bikelane to put together a tailored E&O policy for your business.

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