Professional Liability Insurance
for Retail Stores
If your retail operation faces legal action after botching an order, making a mistake, or disappointing your customers, Errors and Omissions Insurance (aka Professional Liability Insurance) may offer financial protection from the cost of a lawsuit.
In some industries, E&O Insurance is referred to as "malpractice insurance." You've probably heard that in a medical context. Just as doctors can be sued for making a mistake with a patient, retailers can be sued for problems with their work.
Many retailers won't actually need E&O — this is particularly true if you only handle small orders. However, for some specialty retailers, E&O can be quite important. For instance, optometrists may want E&O because they could be sued over defective eyeglass lenses.
So how do you know if your retail business should consider signing up for E&O Insurance? We'll help you answer that question below as we look at how this coverage works.
When It Makes Sense
When E&O Insurance Makes Sense for Retailers
If a customer has a problem with a product you sell, it's easy enough to offer a refund or give them store credit, but some retailers have bigger liabilities that could be covered with E&O Insurance. Here are some cases where E&O could be a smart investment for a retailer:
- Florists and bridal shops that handle large orders for weddings and may be sued over botching an expensive order for a fancy wedding.
- Computer retailers who also do repairs or provide other technical services to their customers.
- Optometrists who might be sued for making a mistake with a customer's prescription lenses.
Generally speaking, retailers who oversee large, specialty orders or provide services should consider investing in Errors and Omissions Insurance. Talk with an insurance agent to see if this coverage makes sense for your business.
How E&O Works
How Errors and Omissions Insurance / Professional Liability Insurance Works
Retailer Errors and Omissions Insurance may cover many of the costs of a professional liability lawsuit, including…
- Lawyers' fees.
- Judgments (i.e., the damages you owe a customer).
- Settlements to resolve a lawsuit out of court.
By providing coverage for settlements, E&O Insurance may help you resolve a lawsuit quickly. If a florist botches a wedding day order and is sued for $10,000, their E&O could help cover their legal costs as well as paying for a settlement owed to the newlyweds if they agree to withdraw their lawsuit.
Whether you fight a lawsuit in court or decide to settle it before it goes to trial, E&O Insurance's financial protection could potentially save retailers thousands of dollars in legal costs.
How Much Will Retail Errors and Omissions Insurance Cost?
As with all retail insurance policies, the cost of Errors and Omissions will vary from business to business depending on the industry you work in and the specific risks your business has. Many of our small businesses and retailers pay roughly $400 to $1,300 in yearly E&O Insurance premiums.
Browse our sample retail insurance quotes for more estimates.
Key Details about Retail Errors and Omissions Insurance
Small business insurance is an investment — it's always smart to spend some time learning how it works and talking with an insurance agent to learn what is and isn't covered. But we can save you a little time by explaining a few key details that will affect your coverage.
Claims-Made Coverage and How to Get More from Your Retail Insurance
If you decide Errors & Omissions Insurance makes sense for your retail business, it's smart to sign up sooner rather than later. E&O is a "claims-made" insurance policy, which means that it may cover lawsuits over mistakes you made while your policy was active. Lawsuits about errors, botched orders, and omissions that occurred before you started your coverage won't be covered.
Here's an example: An optometrist is sued for $25,000 in damages when a customer claims they've been suffering through migraines after buying glasses a year ago. Unfortunately for the optometrist, they started their E&O policy six months ago, which means the initial mistake was made before their policy was in place.
E&O won't cover these older lawsuits unless you specifically buy a policy that has a "tail" or prior acts coverage. These policies typically cost more, so it's a good idea to start your coverage right away and start building your coverage history as soon as you can.
Retail Errors and Omissions Insurance Deductibles and Limits
Errors and Omissions deductibles — the amount you have to pay before your insurance kicks in — usually range from $500 to $2,500. If you had a $2,500 deductible, you'd to pay that amount out of pocket. After that, your insurance would cover the remaining legal costs until you reached your policy limit.
Errors and Omissions limits are usually $1 million, providing ample coverage for small businesses and retailers who want to be protected from costly lawsuits.
E&O Coverage to Fit Your Retail Specialty
Because Insureon's agents specialize in retail coverage and have helped thousands of retailers get small business insurance, we can tailor an E&O Insurance policy to cover your business. Whether you specialize in mobile phone sales and repairs or handle floral arrangements for extravagant weddings, our agents can help you find a policy that makes sense for you.
Fill out an online insurance application and receive free, no-hassle retail insurance quotes.