Error & Omission

Mistakes happen. When a professional makes a mistake that has a financial impact, then the errors and omissions (E&O) policy may be called upon to address the resulting claim.

An example of an E&O claim would be when you have called your broker and added coverage to a vehicle. Later you are in an accident and the insurance company declares that you do not have that specific coverage. Your broker would have to call upon his/her E&O coverage to fill the gap between and if this is not sufficient then the agency itself will have to assume financial responsibility.

Often this type of policy is not called upon to pay out large amounts but rather are needed for the exposure of defense costs. To face litigation is costly, can be time consuming and is likely to be disastrous to one's professional reputation.

This type of policy has a claims made wording. Claims made refers to the time period of the policy and only claims presented during this time period will be covered. It is important with this type of policy to report an "incidents" that may later result in a claim. If you do not then your coverage will not respond to a claim presented prior to the start of the current policy term.

The coverage under E&O is for wrongful acts arising out of specific professional services. The cost of defense is included in the limit.

The wordings of this policy exclude personal and advertising injury. The coverage for financial loss does not need bodily injury or property damage to trigger the claim as both these items are excluded.

You should be very careful to define your operation concisely to your agent or professional insurance broker as your definition forms an important part of your policy.