What situations are covered by an E&O policy?
Each policy’s terms determine what specific situations that policy covers. Depending on terms, E&O can apply in a variety of scenarios:
- Investment manager makes an incorrect trading order.
- Real estate agent fails to disclose that a property is a historical landmark.
- Home inspector overlooks a structural issue with the foundation.
- Paralegal makes a clerical error that compromises a case.
- Tax preparer enters a decimal in the wrong place.
- Media consultant approves an ad that’s against regulatory requirements.
A specialized E&O insurance agent can provide detailed explanations of what a particular policy would likely cover.
Is E&O insurance suitable for medical professionals?
Medical professionals typically require medical malpractice insurance, which is different from E&O. Medical malpractice coverage is specifically tailored to address the unique risks associated with practicing medicine, which are often more complex than those covered under standard E&O policies.
What’s a “claims made” E&O policy?
“Claims made” E&O policies generally provide coverage based on when a claim is filed, rather than when the alleged error or omission occurred. These policies usually cover claims so long as they’re filed within the policy period. Claims are still subject to a retroactive date, but that can be before the policy goes into effect.
Many E&O policies are underwritten as claims made policies. This extends coverage, and makes assessing a claim easier when the date that bad advice was given is unclear.
What’s an “occurrence” E&O policy?
“Occurrence” E&O policies differ in how they assess whether a claim is valid. These policies generally base eligibility on when an error occurred, as opposed to when a claim was filed.
What’s a “retroactive date?”
In E&O policies, a “retroactive date” generally marks the earliest date an error can occur for it to be covered under the policy. Any errors made before this date are typically not covered, even if the claim is filed against a claims made policy.