9 Tips for Errors and Omissions Risk Management

If you provide a professional service or advice, a large part of your risk management will be protecting yourself and your business from errors and omissions (often referred to as E&O). Mistakes happen, but you want to do your best to avoid them, minimize their negative impact on you and your client and move past them with grace. This will help you maintain your professional reputation and avoid lawsuits. Here are some ways you can prevent errors and omissions claims: 

1. Vet your clients.  
2. Develop clear and comprehensive contracts.  
3. Excellent communication.  
4. Proper documentation. 
5. Screen employees and third-party vendors. 
6. Stay current on licensing, education, and training. 
7. Have a review process. 
8. Don’t provide a service or advice you’re not qualified to give. 
9. Have a good commercial insurance broker. 

1. Vet Your Clients 

Ensuring a client is the right fit for your business is always a good starting point. However, you may be in a position where you need to accept all clients that come through your door. Either way, here are some best practices to vet your clients and establish a good relationship: 

• Require a referral or reference.  
• Ask about past projects or experiences in your industry. 

• Understand the end goal of the prospective client – what do they really want to achieve or accomplish? 
• Clearly explain your services and fees.  

If you feel a client isn’t a good fit for you or your business, it’s best to refer them to someone else or gently explain why your services aren’t a good fit for their needs or budget.  

2. Develop Clear and Comprehensive Contracts 

Your contracts should be extremely clear and comprehensive. You want to include the following: 

• Your responsibilities or services with defined deliverables. 
• The client’s responsibilities or deliverables. 
• An overview of the process (with milestones, if possible).  
• Expected timelines and what happens if there are delays. 
• Fees and expected payment schedules.  

• What to do if there are disagreements or complaints or a need to end the contract for either side. 

We strongly recommend having your contracts reviewed by your lawyer and your insurer.  

3. Excellent Communication 

Communication can help you avoid issues or work through problems. It is important to regularly be in contact with your clients and provide updates and context when needed. You should also disclose delays and other issues as soon as you are aware of them. Be honest and empathetic with your customers and hopefully, you will receive the same treatment. It is important to remain professional even if the situation deteriorates or is stressful.  

4. Proper Documentation 

Documentation is critical, especially if you ever have an errors and omissions claim. It is important to document all communications with clients. If you have a phone call or in-person meeting, make sure you follow up with an email confirming what was discussed. 

It is also important to keep detailed and accurate records. Make sure you have copies of contracts, communications, invoices, and all other relevant documentation attached to that client. You should have a digital backup as well.  

Be sure to protect all client data with good cybersecurity practices including strong passwords, multifactor authentication, and limited access (only those who need it should ever have access). 

5. Screen Employees and Third-Party Vendors 

If you have employees or third-party vendors, ensure you screen them properly. This includes doing background or reference checks, having a thorough interview process, ensuring everyone is properly insured and licensed, and providing adequate training.  

Keeping employees and vendors happy is also an effective way to ensure reliable performance, loyalty, and a positive relationship.  

6. Stay Current on Licensing, Education and Training 

Few business owners want to make a mistake or give a client the wrong advice. The best way to avoid this is by staying current on all licensing, regulations and continuing your education in your industry. Being informed on industry best practices helps you deliver better services or advice and protects you and your business from errors and omissions. Here are a few ways you can stay current: 

• Subscribe to industry publications or newsletters.  
• Sign up for at least one relevant course per year.  

• Read newly published books on your industry or field.  
• Follow social media accounts for thought leaders or major institutions in your industry. 
• Attend seminars or conferences. 

7. Have a Review Process 

A good review process can catch mistakes before they happen (or before they impact the client). Establish a process to check your work. This may include a simple read over, going through a checklist, review by software or another person or something completely unique to your business.  

8. Don’t Provide a Service or Advice You’re Not Qualified to Give 

Never give advice or deliver a service you are not qualified for. It is important to know your professional limits. We recommend having a list of professionals you trust to refer your clients to. 

9. Have a Good Commercial Insurance Broker 

A commercial insurance broker can do two very important things to help protect your business from errors and omissions claims: 

1. Get you the right errors and omissions coverage (known as professional liability insurance).  
2. Advise you on specific risk management practices to prevent errors and omissions claims.  

Contact us today to speak to one of our experienced commercial brokers and learn more about managing your errors and omissions risks.