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Errors and Omissions insurance is also known as Malpractice insurance, or Professional Liability. Physicians, lawyers and other professionals carry malpractice insurance, and architects and engineers carry professional liability insurance...both subsets of what is generally called Errors and Omissions (E&O) insurance.
Should you carry E&O insurance? The question could be framed more directly as "Do you provide professional advice or service? And would a failure to provide accurate advice or render complete service result in damages to a customer?"
Properly arranged, this kind of insurance will provide three areas of important financial protection:
Payments for the defense team can be the most important part of this insurance because you don't have to make a material error or omission to be sued. Of course settlements and judgments are important too, because these are losses that are difficult to quantify until rendered.
Choosing E&O can be complicated. Unlike other kinds of insurance, the policy language is not standardized. One of the most important steps in the application process is the definition of your professional services. A broader definition is always better, but the definition needs to be reviewed in every case.
When a quote is received, it is important to review whether defense costs are included in the policy limit purchased, or whether they do not count toward your total amount of insurance. This is referred to as "defense within limits" or "defense outside of limits." Defense within limits means that if your defense costs $30
We use a checklist of various policy features to help communicate to customers some of the more important options available.0,000 and you have $1,000,000 limit, you have only $700,000 still available for settlements or judgments. Defense outside the limits would leave the full million dollars available for settlements or judgments.
Most E&O policies use a claims made form as opposed to an occurrence form. This distinction is important when considering if there is coverage in place when the claim is filed or when the incident happened. Coverage for personal injury, copyright infringement, and whether or not the coverage is worldwide are also important options to consider.
The cost of this insurance is usually based upon your total revenues for your professional services. Most professional liability policies start at $2,500 but can run much higher depending upon the size and scope of your practice.
For more information about your particular professional liability needs contact the insurance professionals at Gordon Atlantic by calling toll free (800) 649-3252. Prefer to type instead of talk? Click below for a prompt answer to your question or for a free quote!
Watch the video below to see how Geoff Gordon defines Professional Liability Insurance as he originally appeared in BusinessTown.
