The Basics Of E & O
E&O delivers coverage against claims involving the professional services provided to a client. It is also sometimes referred to as Errors and Omissions Insurance. This differs from General Liability Insurance which pertains to bodily harm or property damage.
- E&O defends against alleged incorrect work done for a client that resulted in business interruption or financial loss for them.
- Many client contracts will help limit your overall liability but E&O helps with the burden of expenses, i.e. lawyer’s fees.
- Every policy covers different insurable risks so it is important to review such policies and extend your coverage if needed.
Two Kinds of Policies
- Occurrence Policies- The policyholder is covered for any claims that have occurred during the term of the policy, regardless of the date the claim was reported.
- Claims Made Policies- The policyholder is covered for claims that are reported only during the term of the policy.
Coverage for events that occur prior to the term of the policy is called “prior acts coverage” and typically is only included in a policy when the immediate new policy is consistent with the prior coverage of the former policy.