Foreclosure Cleanup Business Advice: The Difference Between E&O and General Liability Insurance
Last week here, we discussed Errors & Omissions (E&O) insurance. As a foreclosure cleanup business owner, another type you’re likely to hear a lot about is General Liability insurance.
Here, we’re going to discuss what this is and how it differs from E&O insurance. Insurance is an important part of every business. And, it’s vitally important in services businesses like this one (ie, dealing with properties) where accidents, theft and a host of other problems can occur.
Hence, knowing what you need and why is critical to landing jobs. No insurance, no job. Proof? Read this Advice from a Banker Who Handles Foreclosed Properties.
What Exactly is Errors and Omissions (E&O) Insurance?
This type of insurance is commonly referred to as professional liability insurance. Professionals like realtors, brokers, financial advisors, etc. are required to carry it. It’s akin to malpractice insurance, for it covers errors and/or omissions (mistakes/mishaps) that these types of professionals make that cause financial harm to another party.
E&O insurance protects/covers those who carry it from lawsuits that relate to an error they may have made while providing their particular type of service.
Note: E&O insurance DOES NOT replace liability insurance. It must be carried separate and apart from standard general liability insurance.
In last week’s post, we explained why foreclosure cleaning businesses, for the most part, DO NOT need Errors & Omissions Insurance.
What is General Liability Insurance?
General liability insurance for the most part covers claims against bodily injury, personal injury, advertising injury and property damage. Now as a foreclosure clean up business owner, you DO need this type of insurance – for obvious reasons.
Note: Most are not familiar with “advertising injury.” This covers the policy holder in case they are sued for something like slander or false advertising.
The Primary Difference between Errors & Omissions and General Liability Insurance
Just in case you didn’t catch it, E&O insurance covers claims that result in a “financial loss” another party may have suffered because of your negligence (mistake, mishap, error).
General Liability insurance covers claims that result in personal injury, bodily injury, advertising, or property damage.
Foreclosure Cleanup Business Owners: What to Do If You’re Asked for an Insurance You Don’t Have
Many times, the company requesting the insurance may not know why it’s necessary for you to have it – especially in the case of E&O insurance. It is NOT an insurance the vast majority of foreclosure cleanup businesses need.
Impress upon the company requesting the insurance exactly what you do and exactly what type of coverage you have (and how much of it); also offer to send them proof.
If they persist in asking you for, for example, E&O insurance, ask they why you need it. Refer back to the June 4th post on Errors & Omissions insurance for further clarification (ie, the portion that explains that you’re not a realtor or broker and therefore, are not required to have this type of insurance as a contractor/subcontractor).
Learn more about what types of coverage and how much of each you’ll need in this detailed booklet on foreclosure cleanup business insurance.
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Copyright © 2010 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.