Important Facts about E and O Insurance
Here are some key details about Errors & Omissions Insurance to keep in mind while helping your clients find a policy that fits their needs:
Know the Difference between "Claims-Made" and "Occurrence" Coverage
E&O Insurance can be purchased as a "claims-made" or an "occurrence" policy. For a claims-made policy, two conditions must be met in order for your client to receive coverage:
- Your client's policy must be active when the incident occurred.
- The same policy must be active when the claim is filed.
Some policies include a "retroactive date" that provides coverage to your client prior to the policy period.
With an occurrence-based policy, your client is covered if the act, error, or omission happens during the policy period. Even if a claim is reported outside of the policy period, your client is covered so long as the event occurred while the policy was active.
Pay Attention to Exclusions
No policy covers everything, but E&O Insurance has some common exclusions, such as criminal prosecution. E and O only deals with civil torts. It also won't cover claims over bodily injuries or property damage. Your client's General Liability Insurance handles those kinds of claims. Finally, E & O policies don't typically include Cyber Liability, which covers events such as technology malfunctions and data breaches. However, Cyber Liability Insurance can be added on to an E&O policy, depending on the carrier.