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What is Errors and Omissions Insurance?


What is Errors and Omissions Insurance?What is Errors and Omissions Insurance?

When someone hires you for your professional expertise, they expect the best. However, even when employing Best Practices, you can end up causing harm or injury as a result of an error or omission during the course of your work. If the injury or property damage is severe, a settlement could be financially devastating. Many times, the legal bills alone can wreak havoc on a business, even when the allegations are without merit. This is where errors and omissions insurance comes in.

What Is Covered in Errors and Omissions Insurance?

An Errors and Omissions insurance policy (E&O) is a must for all professional practices and should be an integral component of one’s insurance portfolio. Also referred to as professional liability, malpractice insurance, or legal liability insurance, an Errors and Omissions policy insures a professional and its practice or firm against losses stemming from accusations that an error or negligence on your part caused physical or financial harm to someone.

Costs for settlements, damage awards and legal fees related to claims against your professional services are usually excluded from coverage under your general liability insurance policy but will be covered under an Errors and Omissions Insurance policy. Some insurers may offer policies that provide legal defense costs outside of liability limits. It may even be possible, depending on the policy, to get legal expenses paid for from the first dollar forward.

There are policies available for those that are interested in covering work performed before initiating a policy, which can be accommodated under prior acts coverage. There are also policies that are designed for professionals who are winding down their careers but want coverage that will provide protection into the future, including into retirement.

Most Errors and Omissions insurance policies, however, exclude punitive damages and limit coverage for the services of independent contractors.

Who Is Eligible for Errors and Omissions Insurance?

You should seriously consider this coverage if your business: provides a professional service, regularly gives advice, and/or is required by its clients to have Errors and Omissions insurance. This encompasses many professional classes, including management and IT consultants, investment advisors, physicians and their assistants, attorneys, architects and engineers, accountants, insurance agents, real estate appraisers, property managers, graphic designers, printer, and more.

Examples of Errors and Omissions Insurance Claims

Depending on your profession, the type of claims will vary but all have one thing in common: A client is alleging that the expected result from the services provided were not delivered, and as a result harm or injury was caused. Some examples of allegations made in errors and Omissions claims include:

Errors and Omissions Insurance for Attorneys

– Allegations of failure to meet deadlines, failure to file a timely appeal, failure to properly structure an agreement, billing issues

Errors and Omissions Insurance for Medical Professions

– Allegations that the standard of care was lower than the patient could reasonably expect to find elsewhere; a physician prescribing a medication or medical device without fully reading the instructions or prescribing the wrong amount which results in injury; a situation where a medical professional fails to obtain a patient’s “informed consent” in relation to a procedure or treatment, which can be construed as a form of negligence

Errors and Omissions Insurance for Management Consultants

– Allegations of improper documentation, improper fact verification, missed deadlines, misrepresentation of facts, breach of non-disclosure, deliberate dissemination of false information, loss of data as result of improper procedures or negligent handling of information

Errors and Omissions Insurance for Insurance Agents

– Allegations of failure to recommend needed insurance coverage, failure to place requested coverage, failure to place coverage promptly, failure to increase/update coverage, failure to disclose/explain coverage limitations, verbal extension of nonexistent coverage, failure to notify of cancellation or non-renewal, and failure to place insurance with a solvent insurer

No Profession is Alike, No Errors and Omissions Insurance Policy Is Alike

When looking to purchase an Errors and Omissions policy, be sure to speak with an insurance expert that understands the various professions and their exposures, the type of errors that can occur, and what needs to be covered. There are various policies available and it is key that you work with an insurance advisor that can read through the fine print and tailor the right policy for you and your firm and the risks you face.

Axis Errors and Omissions Insurance coverage provides protection for you in the event that an error or omission on your part has caused a financial loss for your client. Be sure you secure the policy you need. Call us at Axis Insurance Services, the professional liability insurance experts, at (877) 787-5258.

Source: Axis Insurance

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Blogged on: October 2, 2012 by Mike Smith
Error Omissions
Error Omissions
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