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Who Should Be Buying an Errors and Omissions Policy?


Providing Professional Services Means E&O Insurance is EssentialProviding Professional Services Means E&O Insurance is Essential

Errors and Omissions (E&O) insurance, which also goes by different names depending on the profession and industry (such as Medical Malpractice or Lawyers Professional Liability or Legal Liability), is essential coverage for physicians, lawyers, architects, insurance agents, real estate agent, mortgage brokers and many other “professionals” and their professional practices. It’s also must-have protection for companies that are not professional practices but provide professional services to others, such as advertising companies, property management companies, staffing agencies, market research companies, and Internet service providers among others.

E&O insurance provides professionals with coverage for amounts they may become liable for due to rendering or failure to render professional services. A professional is someone who has special knowledge and skill needed to provide a professional service, and who is subject to the legal, ethical, and/or technical requirements of a given profession. Typically, in order to practice, as in the case of a physician, attorney, or architect, you’re required to earn specialized degrees and comply with relevant regulations and held to certain standards of case. In the case of insurance agents, real estate agents, and others, you are licensed and/or certified, and generally need to meet continuing education requirements throughout your career.

As we discussed many times in the past, there is no standard E&O insurance policy. Depending on the profession, a policy can be customized to address the profession’s exposures. But generally it covers the professional, his/her partners and employees, and the company for damages directly caused by providing or failing to provide professional services. Usually this means that a client has suffered a monetary loss as a direct result of relying on the professional’s work. In the case of some professionals, such as physicians and others in the medical field, in addition to covering financial losses, there will also be coverage for bodily injury or property damage but only when the injury or damage is as a result of an error or omission in providing one’s professional services.

Typically, policies will cover both damages and expenses, such as attorney fees, outside experts and other expenses. Having this defense coverage with an E&O policy alone is critical because of the significant costs such lawsuits can rack up – even when the claim has no merit.

E&O claims differ, of course, depending on the profession. For example, for attorneys, claims typically result from: failure to file within the statute of limitations, failure to timely file an answer, poor advice, failure to know the law, conflict of interest, and failure to follow a client’s instructions. For architects and engineers, E&O claims include: cost and time overruns, negligent design or preparation of plans, failure to meet code, improper selection of materials, and structural failure. For accountants, you will see claims that comprise of errors in financial statements, errors in audits, negligent tax filings or tax preparation, failure to detect embezzlement, and poor management advisory services.

Errors & Omissions coverage is a critical component for professionals and those offering professional services to have a comprehensive insurance program. At Axis Insurance Services, we are the E&O experts working with top-rated insurers to customize policies to address your particular needs. Give us a call at (877) 787-5258 to discuss how an E&O policy will safeguard your assets and provide you with peace of mind to continue to offer your valuable services.

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Blogged on: January 26, 2015 by Mike Smith
Error Omissions
Error Omissions
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