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Inside an E&O Insurance Policy


Inside an E&O Insurance PolicyAdditional Features Available in Errors and Omissions Insurance

Errors and Omissions (E&O) insurance, or Professional Liability as it’s also known, is required for professionals to protect themselves against claims that involve allegations that the work performed or services provided caused a client to suffer a financial loss. This coverage is needed as a General Liability policy does not provide for such claims.

Professionals who typically require E&O insurance include accountants, insurance agents, architects and engineers, attorneys, financial planners, real estate agents, property managers, mortgage brokers, technology consultants, physicians and other medical staff (medical malpractice), among many others. E&O insurance will pay for defense costs along with any court-ordered judgments or settlements to compensate the suing party, up to the limits of your policy.

Generally speaking, the types of claims covered include: failure to deliver promised services, negligence in providing professional services, errors and oversights, and incorrect or incomplete work. But it’s important to note that no two E&O insurance policies are the same, with insurers writing coverage on their own forms. The policies can be customized to address a specific profession’s exposures. You can also purchase a policy with a broad definition of what is covered for your profession, especially when securing a policy from an insurance specialist in your field.  For example, an attorney wants broad enough E&O insurance to cover allegations involving such things as failure to meet deadlines, failure to timely file an appeal, billing issues, and failure to properly structure settlement agreements, etc.  A title agent wants to insure against allegations that involve failure to find mortgage assignment; failure to find land subdivision; failure to find deed entry or deed fraud; failure to find will and probate entry; failure to find liens, encumbrances, easements or encroachments; an incomplete review of title; improper or inadequate documentation; a search performed on wrong parcel; or breach of contract.

In addition, E&O policies offer features that can be purchased or added on. This may include writing a policy to pay defense costs separate from the liability limits. It’s also possible to obtain coverage that pays legal expenses from the first dollar charged, known as “first-dollar defense” coverage.

You can also insure against claims arising out of work done before the initiation of the policy with prior acts coverage. What’s more, if you want coverage for professionals who are about to retire, there are policies that can accommodate this. These are policies with extended reporting periods that allow for coverage for a set period after the policy term expires.

There are also E&O policies that provide for Cyber Liability insurance, must-have coverage with today’s increasingly high risk of cyber attacks and data breaches and stricter regulation, especially in specific business sectors, such as those in technology and healthcare. Some E&O policies will extend coverage for employment practices for specific classes of business. For example, a property manager may be able to purchase a policy tailored to provide a separate limit of liability for errors and omissions, tenant discrimination, and employment practices liability.

There is a lot to understand when it comes to errors and omissions insurance, which is why it’s so important to work with an insurance partner that specializes in this area. Your insurance advisor will guide you through the various policies and forms available to get the best fit for your company. At Axis Insurance Services, our specialty is E&O coverage, and can help you with your insurance needs. Just give us a call at (877) 787-5258.

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Blogged on: April 17, 2014 by Mike Smith
Error Omissions
Error Omissions
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