What is Errors and Omissions Insurance?

Professional workers are generally expected to apply their knowledge correctly, and they sometimes are held responsible if they make a mistake when giving advice. Errors and omissions insurance helps shield professionals from some of the financial consequences that might follow errors they make when giving advice.

Errors and omissions insurance is a common but specialized type of professional liability insurance. As is true with most liability insurance policies, errors and omissions policies usually help pay legal costs, settlements and judgements associated with covered claims.

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Who Needs E&O Insurance?

Professionals generally should have some form of professional liability insurance in place, but the specific type of policy they need normally depends on their situation and line of work. E&O insurance is frequently used by professionals who primarily give advice, such as:

  • Attorneys and paralegals
  • Investment advisors and financial planners
  • Insurance agents and brokers
  • Real estate agents and brokers
  • Trustees

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Medical malpractice insurance is probably the most well-known form of professional liability insurance that’s used by professionals who don’t only provide advice but also execute a skill.

Anyone who’s unsure whether E&O insurance or another form of professional liability coverage is more appropriate for their situation should speak with an agent who specializes in these types of policies. A specialized insurance agent will be familiar with the different types of professional liability policies that are available and understand the nuances between the various options. The agent will be able to make an informed recommendation based on their knowledge.

What Sorts of Mistakes does E&O Insurance Cover?

E&O insurance is often adjusted to suit the risks that come with a professional’s particular field, so the incidents that these policies cover frequently vary. Nonetheless, most policies cover a range of possible mistakes. The following are some examples of situations that a particular policy, depending on its terms and conditions, may cover:

  • A real estate agent neglects to note that a building is a historic landmark, and their client can’t renovate it as desired after purchase
  • A paralegal fails to turn in documents by a given deadline, and the case of the firm’s client is jeopardized
  • A financial advisor forgets to execute a trade as planned, and their client’s portfolio goes down in value
  • An accountant misreads a figure when transposing tax documents, and their client faces tax penalties and interest later on

An insurance agent who’s familiar with these sorts of policies can explain in more detail what a given policy may cover.

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Does Errors and Omissions Cover Pro-Bono Work for Charities?

Some errors and omissions policies may cover pro-bono work that professionals do for charities, but other policies may have more restrictive protections. Professionals who do a lot with charities and want to make sure their efforts are covered should carefully review any policy they’re considering with an informed insurance agent.

What Are Claims Made Insurance Policies?

Many errors and omissions policies are written as “claims made” insurance policies, which means they normally determine coverage based on when a claim is initially filed as opposed to when the error is alleged to have occurred. Policies are written this way because it is sometimes challenging to determine when precisely an error was made.

When reviewing claims made policies, there are two notable items that deserve special consideration:

  • Most policies have a retroactive date that determines the earliest date an error can occur and be covered
  • Some policies have discovery periods that extend coverage beyond the end date of when a policy ends

Retroactive dates are often the initial day of a policy’s effective period, but they can be different. Discovery periods can be anywhere from a few months to years.

What Types of Coverage doe E&O Policies Provide?

  • Alleged or actual negligence
  • Libel and slander
  • International coverage
  • Legal defense costs
  • Copyright infringement
  • Claims relating to past service

How Can Professionals Get Errors and Omissions Insurance?

For help finding errors and omissions insurance, contact the independent insurance agents at World Insurance Associates. Our agents have helped professionals in many fields with this coverage, and they’re ready to assist you.

 

Meet Your Industry Specialist

Jeff Kroeger

Jeff Kroeger

Principal, Senior Vice President, and Head of Commercial Lines, Mr. Kroeger also manages the company's hospitality book of business and is that unit's primary producer. He is a graduate of Montclair State University and was named a 2015 Young Gun Insurance Business America.

Jeff has been providing exceptional insurance for restaurants, bars, nightclubs, and more for many years. He understands the unique challenges this industry faces and delivers the right coverage at an affordable price.

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