Errors and omissions coverage protects your business in case a client blames you for a real or purported mistake in delivering your product or service. When a client sues, here is how you go about filing a claim with your insurance agency.
Report It Immediately
Contact your insurance agent as soon as possible, to let him or her know what is happening. Have your policy number handy when you call.
Locate every piece of evidence related to communications or transactions with the client suing you. If you have no records of face-to-face interactions, create some by putting to paper everything you remember.
Set Aside Funds to Pay Your Deductible
Ideally, this step should already have been completed. If you don’t have a designated savings account for legal fees, open one as soon as possible.
Decide on a Strategy
The three choices you have are to answer the claim in court, settle the matter out of court, or attempt to dismiss the lawsuit as unsubstantiated. Your attorney and your insurance agent are good sources of advice when deciding what to do.
The most important thing is not to panic. Lawsuits are a normal part of everyday life, and they are the reason you protect yourself with errors and omissions insurance.