Errors & Omissions Insurance for Cannabis Businesses
What is Errors & Omissions Liability Insurance for Cannabis Businesses?
Errors and Omissions insurance provides coverage that protects companies, their workers, and other professionals against claims of inadequate work or negligence. Consultants, attorneys, dispensaries and laboratories are the industries that commonly look for this coverage. However, if you are responsible for tracking or logging data for your clients or dispensing advice to others for a fee or as part of your product offering, this is a coverage you will want to consider.
Common Examples of Errors & Omissions Claims are:
Inaccurate test data leads to product being destroyed.
Contract for a client was improperly drafted, leading to them losing money.
Records or rates for a client are improperly logged, leading to the client losing money.
Inaccurate professional advice.
What is included in Errors & Omissions Insurance?
Errors & Omissions insurance can help you in a variety of situations that include:
- Judgments
- Lawyer fees
- Settlements
- Court costs
- Administrative costs
If your cannabis business makes a recommendation that leads to a mistake that can be directly traced back to negligence or “bad advice,” you may find yourself facing expensive litigation. Even if you win the court battle, the legal fees can still be astronomical. That’s why it’s important to invest in Errors & Omissions Insurance.
What are the benefits of having errors and omissions insurance?
Provides a Financial Backstop Should You Lose a Court Case
Fighting a lawsuit can be stressful. If you’re found to be liable for damages due to an error or omission, you may have to pay out a substantial financial settlement. If you lack the liquid assets to cover the judgment, you may be asked to sell off vital assets to cover the judgment or, even worse, file for bankruptcy.
With Errors & Omissions insurance, you can ensure you’ll have a financial backstop should you end up losing the case.
Asset Preservation
As mentioned, if you lose a court settlement, you may be forced to sell assets to satisfy a court judgment. This can be absolutely crippling to a cannabis operation. Investing in Errors & Omissions insurance can help preserve your assets and keep your business running.
Mitigate Financial Uncertainty
Lawsuits can be unpredictable and are often costly for your business. By protecting your business with Errors & Omissions coverage, you can displace a large, unpredictable expense (such as being sued) with a predictable expense (your monthly/annual insurance premiums).
Tips for Choosing Errors & Omissions Insurance
Know What Errors & Omissions Insurance Doesn’t Cover
Errors & Omissions insurance is designed to protect from honest mistakes that lead to accidental financial loss for your customer. Your insurance policy will not provide coverage for your business if the liability claim falls outside of this scope. Speak with your insurance broker to determine what your policy will cover.
Ensure Your Policy Covers All Legal Costs
Litigation can be costly, involving a medley of expenses that include defense costs, judgments, and settlements. In most instances, your insurance policy should cover must of your expenses. However, some insurance policies may not include defense expenses. Therefore, read the fine print to ensure all your legal costs will be covered.
Find a Qualified Broker
Settling with the first broker you encounter can be detrimental to your business if they’re unfamiliar with your industry. To ensure your success, you should work with a broker who specializes in the cannabis industry, providing guidance for the numerous legal landmines you may encounter along the way.
Get an Errors & Omissions Insurance Quote
For a quote or to learn more about errors and omissions insurance, reach out to us today.
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