Errors and Omissions Insurance
FAQs

 

Frequently Asked Questions (FAQs)

Is E & O Insurance required by law?

No, E&O insurance is not required by law. However, many businesses purchase E&O insurance to protect themselves from the financial damages that can result from errors and omissions.  

When should I purchase E&O insurance?

You should purchase E&O insurance as soon as you start your business. This way, you will be protected from the financial damage that can result from errors and omissions. 

What does E&O insurance cover?

Errors and omissions insurance policies cover attorney fees, court costs, and settlements costs up to the policy’s limits. This also includes a variety of claims, including negligence, misrepresentation, breach of contract, and even unfair competition. Some policies also provide coverage for pre-judgment interest and punitive damages, which are not typically covered by general liability insurance.   

Does my business need E&O insurance?

If your business provides clients with professional services, you should consider purchasing E&O insurance. This type of insurance can provide valuable protection for your business if a client files a claim against you for errors or omissions in your work. 

Do I need both E&O insurance and professional liability insurance?

It depends on your business. For professional service providers, they consider purchasing both types of insurance. However, if you are not a professional service provider, E&O insurance may be sufficient.  

What types of businesses need E&O insurance?

Any business that operates professional services to clients can benefit from E&O insurance. This includes firms in accounting, architecture, consulting, engineering, financial services, insurance, real estate, and more.  

How much E&O insurance does a business need?

The amount of E&O insurance your business needs will depend on several factors, including the nature and scope of your professional services, the size of your client base, and the amount of risk you are willing to assume. You can get better service from an insurance agent or broker to determine the appropriate amount of coverage for your business.  

What are some tips for choosing the proper E&O insurance policy?

When shopping for E&O insurance, it is essential to compare policies from various insurers to find the best policy that meets your needs. Be sure to read the policy carefully and make sure you understand the coverage it provides. It’s much better when you compare an insurer’s financial stability and its claims-paying ability.  

Is E & O insurance different from professional liability insurance?

There is not much difference between E & O and professional liability Insurance. The coverage provided by both is similar. Both protect your business from expensive lawsuits caused by unwanted happenings while delivering service. Professional liability insurance covers claims from professional services, like accountants and consultants, while E&O insurance covers claims arising from errors and omissions in the course of those services. No matter the name, coverage protects you from lawsuits if you make a work mistake, fail to complete a project, miss a deadline, or are accused of professional negligence. 

What is malpractice insurance?

Malpractice is a professional liability insurance that covers healthcare professionals. It provides coverage to physicians and other medical professionals generally concerned with providing services that directly concern the clients’ health and wellbeing. Also, malpractice insurance is used by professionals in the field of law. 

What is the difference between an E&O policy and a malpractice policy?

E&O insurance covers claims arising from professional mistakes while providing services to clients. At the same time, malpractice insurance covers claims arising from professional medical negligence. Because of the difference in service, a different term is used for the same kind of coverage. 

Does E & O insurance only cover the court fees?

No, E & O insurance covers both court fees and settlements of any amount the insurance contract has mentioned.  

What does E & O insurance not cover?

The E & O insurance does not cover criminal prosecution and any other civil liabilities that have not been listed by the policy that can arise in the civil court. It also does not cover claims outside the policy’s retroactive start date or extended reporting period. Additionally, it does not cover bodily injury, property damage, injury or illness of the employee(s), discrimination, harassment, illegal acts, or deliberate wrongdoings.   

How is the E & O insurance policy sold?

The policy is sold solely on a “claims-made” basis. It covers the work undertaken while the policy is active and covers claims filed during the term of the policy. You can apply for an extended reporting period during which the insurance works. Beyond this point, or if you cancel your policy, you will not be able to get coverage against any claims.  

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