Professional Insurance - Errors & Omissions

E&O Insurance

Liability insurance that helps protect professional advice

Professional liability policies, also known as Errors and Omissions (or E&O) insurance, generally provide coverage for actual or alleged errors, omissions, negligence, breach of duty, misleading statements, and similar claims resulting from the performance—or non-performance—of professional services. Most policies cover both the defense costs (attorney fees, court costs, etc.) and settlements or judgements. Intentional wrongdoing is typically not covered.

If you have a “claims-made policy” or “prior acts coverage” with a retroactive date, coverage applies to claims arising from incidents which occurred prior to the effective date of your policy, as long as the claims are reported while your policy is in effect. If you have an “occurrence policy” or “extended reporting period”, coverage will apply to claims which are reported after the policy ends, as long as the incident occurred while the policy was in effect.

Nearly all professional liability policies vary in terms of their coverage options.  Here are some questions you should consider when evaluating professional liability policies:

  • Does your policy provide coverage for administrative or disciplinary proceeding brought by a governmental or regulatory body?
  • What “triggers” coverage? Does a simple allegation, such as a statement made by a client, or does an actual written demand have to be made…or maybe a lawsuit must be filed and served before you're protected?
  • If you need to take time away from your practice or business for depositions, trial, etc., will you be compensated in any way for lost income?
  • Does the policy have a deductible? Does the deductible apply to defense costs?
There are no right or wrong answers to any of these questions, but it is critical you know what coverage(s) you're buying. Getting your questions answered is an essential part of the insurance buying process. Once you have a claim, it is too late to find out what coverage you don’t have. Don’t make the mistake of assuming that the policy which is handed to you is what you need.