Insurance for the professional service business. Errors & Omissions or E&O insurance will cover your business in event of negligence to perform professional duties. Anyone who charges a client for a fee has an E&O exposure. Anyone who gives advice to a client and charges a fee has an E&O Exposure. If you mislead a client or misrepresent a product or service, you open your business up to a lawsuit.
If you are a small business owner and are being sued, can you afford to pay these costs and keep your business afloat? In the event of a claim, your E&O policy will cover judgments, settlements, and defense costs. E&O insurance covers the business owner, employees, and subcontractors. E&O policies can be customized, so you pay the right premium for the right coverages.
Insurance premium depends on a variety of factors. These factors can include type of business, location of business, past claims, and what coverages.
- Real Estate Brokers
- Insurance Brokers
CLAIMS MADE BASIS
The bulk of Errors and Omissions insurance policies are written on a claims made basis. Pay out is restricted to the policy limits during the policy period.
The retroactive date is the effective date your first E&O policy. If you purchased a 12 month E&O policy on January 1, 2016, this is your retroactive date. If you renewed your policy January 1, 2017, this is your new effective date, but your retroactive date is still January 1, 2016. Any claims from January 1, 2016 to January 1, 2018 would be covered. Claims have to be submitted while your policy is active and in full force in order to be covered.
If your policy is effective January 1, 2016 to January 1, 2017 and you do not renew your E&O policy, you will not be covered for any claims made after January 1, 2016 even if the mistake was made within the policy effective dates. When you let a policy lapse or cancel, any retroactive date or prior acts date are voided.
PRIOR ACTS COVERAGE
Some companies offer prior acts coverage. In this case, your retroactive date may be a date before your policies effective date.
If you decide to retire or close your business, tail coverage can be purchased. Tail coverage extends past the policy’s expiration date for a specified amount of years. Only claims from the retroactive date to the last date the business was operating. No claims after the business is closed are covered.
WHAT EXCLUSIONS APPLY?
- Bodily Injury
- Property Damage
- Intentional Wrongful acts
- Claims reported under previous policy periods
- Dishonest and criminal acts
- Punitive damages