Prevent Costly Mistakes In Your Business

Law Gavel on BibleLook, everyone can make a mistake at work. Perhaps you send an email to the wrong person, ship the wrong product to the wrong address. These common errors could disrupt business operations or lose valuable business data. If you run a retail business, a single mistake could result in a significant loss of productivity and profit. NASA engineers left off a decimal point and forgot to use the metric system which led to the downing of a spacecraft! 

Most human errors fall into four categories: knowledge-based mistakes, lapses in memory, rule-based error, and slips. 

Knowledge-Based Mistakes

The knowledge-based human error is a common mistake when there are no set company rules for addressing problems. When an inexperienced employee doesn’t have the answers to a problem and is unable to communicate with someone more senior, they may make a decision based on their limited knowledge and resources. 

Lapses in Memory

Memory lapses can frequently happen, especially in busy or stressful work environments. Whether it’s forgetting to perform an important step in ensuring security or forgetting critical individuals in required communications, these lapses can seriously impact operational efficiency and data security. Failing to update records or reports is another example of this type of human error.

Slip Error 

Slip error is a common error that comes from a lack of concentration and fatigue among employees. This mistake occurs when an employee accidentally mixes up sensitive information and documents, or performs the wrong task when trying to keep up with manual input. These mistakes can create a domino effect as other departments rely on the same inaccurate info or data in their work.

Rule-Based Mistakes 

Rule-based human error can take place as a result of a change in a business’s owners. For example, after a merger, some old policies that don’t conform to the company’s current status might still be in place. This leaves employees incorrectly following the previous rules to complete their daily tasks. A different interpretation of the rules may also lead to errors.

No matter the reason, mistakes happen in business and your personal life…however, in our highly litigious society, the mistakes you or a member of your team make during their work life can result in a lawsuit that can be so large it can bankrupt your company.

Enter Errors and omissions insurance, also known as E&O insurance and professional liability insurance. It helps protect you from lawsuits claiming you made a mistake in your professional services. This insurance can help cover your court costs or settlements, which can be very costly for your business to pay on its own.

If someone sues your business for making a mistake in the professional services you’ve provided, this insurance can help protect your business from claims of:

  • Negligence
  • Errors in services given
  • Omissions
  • Misrepresentation
  • Violation of good faith and fair dealing
  • Inaccurate advice

The time to buy insurance is before you need it. Since E&O insurance is generally specific to your profession and industry, you will want to work with an insurance professional who understands the unique professional liability risks your business faces.

© Copyright 2022. All rights reserved. This content is strictly for informational purposes and although experts have prepared it, the reader should not substitute this information for professional insurance advice. If you have any questions, please consult your insurance professional before acting on any information presented. Read more.

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