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How Delays Can Affect Businesses with Errors and Omissions Claims

by | Jul 15, 2024 | Professional Errors And Omissions |

Businesses in the construction sector often carry a variety of different types of insurance because of the safety-critical work that these organizations perform. General liability coverage is often not enough to offset the risks involved in erecting, expanding or modifying structures. Construction companies often need a variety of different kinds of insurance coverage for comprehensive protection. The exact coverage necessary depends in no small part on the services the construction company offers clients.

When the business employs architects and other professionals to help design buildings or review proposed blueprints, there is a degree of liability related to those professional services. Errors and omissions insurance can help protect companies from claims that they failed to consider all risk factors or otherwise provided unprofessional architectural support services.

If a client initiates legal action against a construction company based on faulty design or failure to notice issues with a blueprint, the company could experience numerous expenses. Errors and omissions insurance can be a crucial form of protection in the company is vulnerable. Unfortunately, businesses may find that insurance providers aren’t eager to settle claims with disappointed clients or otherwise provide appropriate financial support.

How Delays May Hurt Business

Delays in claims processing or payout can cause a variety of challenges. In some cases, the lack of an affirmative response from an insurance company could prompt the frustrated client to push forward with a lawsuit. They don’t care who pays as long as they receive reimbursement for the economic impact of the alleged errors and omissions involving the company’s architect.

Client-initiated litigation could prove quite costly or could cause real damage to the company’s reputation. The business may have to absorb costs that the insurance policy should cover until the resolution of the pending claim.

Other times, delays might force the organization to shoulder customer claims expenses on their own. Leadership may need to take out loans or liquidate company resources in extreme cases. Even if the business already has a general liability policy, that insurance coverage is unlikely to offer any real protection against a lawsuit based on errors and professional failures. Organizations could potentially grind to a halt and be vulnerable to failure and dissolution after a high-value professional liability claim made by a client.

Negotiating with an insurance company is challenging, even for professionals who regularly deal with clients. As such, organizations facing insurance denials and delays may need assistance holding a company accountable for a policy that it has underwritten.