Products

Errors and Omissions Liability

Our society places great value on the services of professionals, but the consequences of mistakes can be even greater. Lawsuits, allegations of negligence, client discontent, and missed deadlines all put fear in the hearts of today's professionals. In some cases, the only thing between your client and financial ruin are a favorably worded contract and a good lawyer.

In the ideal world, your client would have the peace of mind that comes with the financial backing of a solid insurance company. In the real world, some professionals may not be aware of the many benefits afforded by an errors & omissions policy.

As mentioned above, maintaining an E&O policy with a financially sound company offers peace of mind. Your client may also be able to obtain more business, as many of their clients will require at least the minimum limits available. Another advantage is the duty to defend clause contained in most policies. When the client alleges professional negligence, regardless of the ultimate outcome of litigation, insurers will pay for the costs of legal counsel and related expenses. This protection is at hand even if the allegations are groundless. As an insurance professional, you must ensure that your clients are protected by an errors & omissions insurance policy.

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What is errors & omissions insurance?
Errors & omissions insurance, also referred to as professional liability insurance, covers an individual or business for alleged "acts, errors, or omissions" committed in the scope of their profession. Coverage is typically limited to financial loss that does not involve bodily injury or property damage. Simply put, errors & omissions insurance covers negligence or allegations of negligence by professionals.

Who needs errors & omissions insurance?
Traditionally, errors & omissions insurance was limited to accountants, architects & engineers, and lawyers. In today's litigious society, any individual or business that can be sued for the professional services they render should inquire about the availability of errors & omissions insurance. Frequently, as a condition of doing business, many contracts awarded will stipulate that the independent contractor providing professional services must maintain a professional liability (E&O) policy.

What is excluded in an errors & omissions policy?
Although each policy form will reflect the exposures unique to an individual or business, errors & omissions policies will usually exclude general liability, directors and officers, and employment practices exposures (these are typically covered in other policies).

What is a claims-made policy?
Most errors & omissions policies are written on a claims-made basis, meaning that a claim must be brought against the insured (and reported to the insurance company) during the policy period to trigger coverage. Coverage is generally excluded for acts, errors, or omissions that occurred prior to the retroactive date of the policy.

What is a retro-active date?
The retroactive date is the date assigned on the policy for which no coverage is granted for all incidents or occurrences preceding that date. Once coverage is in place, the retroactive date remains the same for each year the policy is renewed.

How is E&O coverage underwritten and priced?
Underwriting and pricing of Errors & Omissions liability insurance is subjective in nature. Underwriters consider the insured’s industry class, historical financial performance of the insured, claims history (if any), experience of the professionals, among other factors.