Errors and omissions is an insurance policy that protects federal contractors from claims related to professional liability, such as a mistake, negligence, or failure to carry out their contractual obligations.
Federal contractors often have access to sensitive information, and much is at stake if it is shared or divulged to others due to negligence or human error. These types of claims can be significant and potentially compromise a contractor’s finances.
This type of insurance can help cover damages and legal costs related to these claims. Every federal contractor benefits from having a proper errors and omissions policy.
Unfortunately, many standard errors and omissions policies do not sufficiently address the types of risks that a federal contractor may face. A contractor who does not have proper coverage could end up losing their contract and jeopardize their chances of obtaining contracts in the future.
Therefore, it is essential to be aware of the signs that it may be time to revisit your errors and omissions policy with a professional to ensure it still meets your needs.
Here are some signs that it may be time for an official review.
You Have Changed The Services You Provide
As a federal contractor, you may offer various services, such as consulting and IT. It is important to remember that some errors and omissions policies will only provide coverage for specific types of services. Moreover, some types of activities may be excluded altogether.
For example, upon scrutinizing the terms and conditions of your policy, you may find that intellectual property infringement or cyber liability is not covered. This is why it is essential to look at the wording of your policy and ensure it covers every service you currently provide and those you expect to provide in the future.
It Has Been a Long Time Since You Last Updated Your Policy
Keep in mind that the insurance market is constantly evolving, and errors and omissions policies are affected by these changes from time to time. For example, when new laws are implemented, new types of risks emerge, or new technologies are developed, your policy may need to be revised accordingly.
Therefore, it is essential to review your errors and omissions policy at least once per year to ensure that it is still relevant to your federal contracting business and reflects the current state of the industry in which you operate. Look out for any outdated terms and conditions and ensure they are brought up to date.
You Are Unsure Whether Your Policy Limits Are Suitable
Federal contractors need to review their errors and omissions policy occasionally to ensure that the limits are not too low or too high. This is especially pressing if you have taken on new contracts or reduced the number of contracts you are currently handling.
If your policy limit is too low, you could have insufficient coverage if you must pay for a large claim. As a result, you would be responsible for paying the difference out of pocket and could go out of business.
On the other hand, if your policy limit is higher than the amount you currently need, you could be paying more for your policy than necessary and wasting money that could be devoted to growing your business and obtaining new contracts.
Therefore, it is a good idea to review your policy limits with your federal contractor benefits broker at least once a year to determine whether your current contract requirements and exposure to risk would be better served with a higher or lower limit.
You Are Unsure Whether Your Current Policy Is Fully Compliant With Federal Acquisition Regulations
The Federal Acquisition Regulations, or FAR, specify minimum requirements for errors and omissions insurance for federal contractors. This includes the type of coverage you must obtain, the claims made basis, liability limits, deductibles, and other factors.
Should your policy fail to comply with FAR fully, you could be in breach of your contract. As a result, you could face penalties or termination, in addition to risking your chances of obtaining future contracts.
Therefore, it is important to review your policy regularly with your benefits broker to ensure it fully complies with FAR and other applicable regulations, particularly if any have recently changed.
Review Your Errors and Omissions Policy with the Federal Contracting Professionals
Does your errors and omissions policy cover all the risks you face as a federal contractor? Have your needs changed since you first obtained the policy, or have the regulations in your industry been updated? There are plenty of reasons it may be time for a thorough review of your errors and omissions policy to ensure you are not at risk or overpaying for coverage.
Contact the federal contractor benefits brokers at Business Benefits Group today to determine whether your coverage meets your current needs.