Errors & Omissions Insurance Coverage
Errors and Omissions insurance, also known as E&O insurance, is specialized liability coverage required by a variety of companies and individuals providing professional services, such as accountants, engineers, marketing professionals, consultants, and IT services, to name a few. Despite the best intentions of those in these fields, an error or omission in the performance of their services could cause financial losses to their customers. Liability arising from a claim resulting from a professional service are excluded under the standard Commercial General Liability insurance policy. The legal expenses to defend against the alleged failure to provide adequate professional services can be as significant as the actual claim. Coverage for legal costs for defending these suits is available under an Errors and Omissions policy. Tri-County Insurance represents several specialized insurance companies that have comprehensive Errors and Omissions Liability insurance coverage for various professional service providers.
Professional Liability insurance provides protection for people who give professional advice, make educated recommendations, design solutions, or represent or advocate for the needs of others. People who may benefit from this type of coverage include financial planners, consultants, and designers.
This is an important coverage for anyone who deals with clients who may claim that something done on their behalf was done incorrectly and that this error has caused them a financial loss.
Claims Made Information
Most E&O policies are written on a “Claims-Made” basis. This means that any claim must be made and/or reported within the policy period in which it occurred. These policies have retroactive dates – a date previous to the policy’s effective date where the alleged claim can be considered. The retroactive date is important as claims that arise out of an act prior to this retroactive date will not be covered by the policy.
Defense Costs Coverage
Some E&O policies also include defense expenses within the limit of liability. This, in essence, limits the amount of insurance that may actually be available to pay a claim. Some policies also exclude punitive damages. It is important to make sure the coverage fits your exposure because the wording on each policy can vary. For more information on this coverage, contact our Tri-County Insurance commercial brokers. We are here to help.
Some steps you can take to mitigate an errors and omissions loss and to help control your insurance costs are: One, always have a written contract that explains what will be done, what will not be done and the fees. Two, communicate with your customers throughout the job and manage expectations. Three, have a quality control procedure in place and check the results.
For more information or to get a quote, contact our insurance professionals by phone or online. We are here to help.
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