Errors and omissions (E&O) insurance is an indispensable safeguard for professionals, protecting you and your business from the potential financial fallout of unintentional mistakes. By understanding the available options and considering essential factors before purchasing coverage, your company can ensure it has the proper protection in place, allowing you and your employees to focus on delivering top-notch services amid ample peace of mind. 
Understanding E&O Coverage Options
E&O insurance casts a versatile safety net across many common incidents and allegations involving your professional services. If a customer or client sues your business for inaccurate advice, professional errors, negligence, oversights or missed deadlines, the resulting financial ramifications could be devastating. Fortunately, E&O insurance, or professional liability insurance, may provide you with the financial assistance you need.
Most E&O policies can be classified as one of the following:
- Claims-made policies—These policies establish a retroactive date that provides coverage for incidents occurring on or after a specific date. They may also include an extended reporting period, which extends coverage for a period (e.g., 30 or 60 days) beyond the policy’s expiration.
- Occurrence policies—Under these types of E&O policies, your organization may have access to more flexible coverage. Occurrence policies may provide financial assistance for incidents that occurred while your policy was active, even if it and the extended reporting period have expired by the time the resulting claim is filed.
Factors to Consider When Purchasing E&O Insurance
Like most types of insurance, E&O policies may only be reliable if your organization crafts its coverage appropriately. Selecting the right policy requires careful evaluation of several factors, including the following:
- Nature of services—The type of professional services offered and the associated risks should dictate the coverage needed. High-risk fields, such as financial advisory or consulting, may require higher coverage limits.
- Exclusions and endorsements—Pay close attention to policy details, which outline situations that may or may not be covered. It’s essential to know the capabilities and limitations of your insurance to ensure that uncovered risks may be mitigated using additional measures.
- Deductibles—Evaluate the deductible amount you are comfortable with. A higher deductible can lead to lower premiums but be prepared to pay more out of pocket if a claim arises.
- Coverage limits—If a claim exhausts your E&O policy’s limits, you may be required to pay the remaining amount out of pocket.
- Risk management practices—By implementing and maintaining ample risk management strategies, your organization may enjoy optimal coverage for lower rates.
We’re Here to Help
With over 30 years of experience helping organizations acquire ideal insurance solutions, U.S. E&O Brokers is well-equipped to help you acquire and maintain the right E&O policy. Contact us today to get started.
This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.