By Matthew Simmons, CIC & Ben H. Simmons, CLCS
Georgetown Insurance Service, Inc.
Silver Spring, MD
A traumatic event occurred in Farragut Square on February 2, 2013. A local contractor was hired to cut down a dead ash tree on one side of the park but mistakenly chopped down a historic ginkgo tree. Not only was this tree at least 140 years old but it had also memorized in 2006 as part of the Park Service’s Witness Tree Protection Program. An article published that year compared the situation to “a surgeon amputating the wrong leg.”
While this might seem like an extreme incident, mistakes occur every day in the world of tree removal. Since you can’t always prevent them from happening, what can you do to lessen the blow when they do transpire?
What Is Errors & Omissions Insurance (Professional Liability)?
Errors & Omissions (E&O) insurance – also referred to as professional liability insurance – protects businesses against claims of negligence, incorrect advice, or recommended services that result in a loss to the customer. It covers harm due to mistakes on your part (errors) or if your business failed to perform a service as promised (omissions). Often, incidents covered by E&O insurance are not covered by a contractor’s general liability policy.
Do I Need E&O insurance?
Most professionals providing any type of service such as architects, accountants, real estate agents, etc. need E&O insurance. However, this type of coverage is useful for just about any company providing services that could result in someone claiming inadequacy, damage, or negligence. And as we outlined in our introductory paragraph, tree removal services certainly come with professional risks.
While every company believes it won’t happen to them, mistakes are made. Yet almost 60 percent of tree removal companies and arborists don’t have the protection they need. E&O insurance helps businesses cover the following types of accidents:
- Tree is pruned too much and dies
- A wrong tree is cut down
- Misdiagnosis when consulting
What are the Benefits of E&O Insurance?
E&O insurance can strengthen your tree company’s reputation. It shows that you’re well-prepared and uphold high standards but also realize that human errors do occur. In the event a claim is filed, E&O insurance will typically pay your attorney fees and cover:
- Arbitration or mediation costs
- Copying, filing and software-related expense
- Cost of expert witnesses
- Expenses involved with settling the claim
E&O claims can be extremely damaging and in certain cases, could spell the end of your business. Since they are often more expensive than general liability claims, it’s important to have a separate policy in place. Although many businesses are likely to never file an E&O claim, having this coverage provides you with the right protection, establishes trust between you and your customers, and affords you peace of mind. To find out what coverage is right for you, talk to an insurance agent who’s knowledgeable in insurance solutions for arborists and tree care companies.
Have questions? Contact us to speak with a licensed insurance professional.
Thank you for helping me to understand that E&O insurance is used to protect businesses from people trying to make claims of negligence against them. It seems that this kind of insurance would be really important for any company that performs repairs or any kind of construction. It would be interesting to learn more about what other businesses use E&O coverage.
Thank you Dennis for your interest and reading our article. You can find more helpful blogs on our website here https://www.georgetownins.com/about-us/blog/. You can also use the search field near the top of the website to search for any key words on our website. We also released an article earlier this year about E&O for General & Subcontractors https://www.georgetownins.com/insurance-needs-for-general-contractors-and-subcontractors/. It is always best practice to speak with a licensed insurance professional in regards to your specific business needs.
This blog on “The Tree Care Industry and Errors & Omissions Insurance” is a valuable resource. It provides concise and insightful information about a crucial aspect of the tree care profession. The content is well-structured and informative, making it a must-read for anyone in the industry. Highly recommended!