Errors and omissions insurance (E&O) coverage protects business, their staff, and professionals against negligence claims. It’s often used by professionals who give advice and businesses that provide services. Examples of people who should consider E&O insurance includes financial advisers, investment advisers, lawyers, business consultants, and insurance agents. Nonprofits and engineering companies may also buy E&0 insurance.
According to Investopedia, errors and emissions generally covers legal fees and court costs in addition to the underlying claim. The benefits vary depending on standard issues such as the amount of coverage and the deductible. Generally, errors and admissions insurance covers civil wrongs but not criminal misconduct such as fraud. Some professions are required to have errors and emissions insurance by state licensing agencies and regulatory agencies. E&O policyholders should make sure their coverage includes the negligent performance by independent contractors as well as employees
Events that errors and omissions insurance coverage
Some of the types of negligence and mistakes that errors and omissions insurance covers include:
- Missing deadlines. A lawyer who fails to file a claim on time may affect his client’s right to file a claim. Many investment decisions are time-dependent. Accountants who fail to file tax filings in a timely manner may cost their clients penalties and interest payments.
- Mistakes at work. Any mistakes from failing to fill out a form correctly, giving incompetent advice, or failing to provide a standard care of that others in the industry would have provided can result in a legal claim. An engineer who fails to account for a sewer system, for example, may need and E&O policy if sewage damage occurs.
- Failing to deliver the work that was promised. If an insurance agent fails to submit your application and premium payments to the underwriter, the person who thought he/she was a policyholder (only to find out they’re not) can file a claim against the insurance agent.
Even when you’ve done everything correctly, a dissatisfied client may file a claim. The cost of legal counsel can be quite high if the business or professional doesn’t have E&O insurance.
Errors and omissions insurance does NOT cover:
Errors and images insurance is designed to cover mistakes. It doesn’t cover the following types of legal claims
- Work injury claims. Employers are generally required to have separate workers’ compensation insurance if a worker is injured on the job or develops an occupational illness.
- Customer injuries. Employer should have separate liability insurance that provides premises liability in case someone slips and falls and breaks their arm or injures their back.
- Business damage. A business owner’s policy is required to cover physical damage to a business such as storm damage or damage due to a fire. Any damage for interruption to the business is handled through insurance coverage – separate from the errors and omissions policy.
- Discrimination lawsuits. E&O insurance generally does not protect businesses and professionals from claims that they failed to hire someone or fired someone based on their race, gender or other identity factors.
- Vehicle lawsuits. Companies need separate vehicle liability insurance in case one of their workers causes an accident while driving.
Business owners and professionals should review all their insurance needs before starting any business or professional service.
At Warhurst Law, our insurance dispute lawyers handle a wide variety of insurance claims. Our lawyers hold companies and professionals liable when their mistakes cause you financial harm. To review your claim with experienced insurance dispute lawyers, call Warhurst Law at 251.207.1296 or use our contact form to schedule an appointment in our Mobile office. We fight for all policyholders for homeowner and business insurance claims across the Southeast including Alabama, the Florida panhandle, the Gulf Coast, and Louisiana.