What isErrors & Omissions Liability Insurance?
Hi, this is Jerry Becerra with Barbary Insurance Brokerage, and I’m here to talk about errors and omissions liability insurance. Errors and omissions coverage is the most basic of professional liability coverage. An error is a mistake, and an omission is a failure for you to do your work in the way that you said you were going to do it. Errors and omissions coverage, specifically, excludes coverage for bodily injury or property damage claims. So, what’s it covering? It’s really covering when another party has a financial loss, and usually, that other party is your client. It provides defense coverage. So, it’s going to pay for you to get an attorney. It’s going to pay for you to go to court and get through all of that. And then it also provides damages. The defense and the damage coverages are all included within the single limit of liability. And I like to remind people how expensive it can be to defend yourself in court. Often, that is the biggest exposure, because you can be sued for anything, right or wrong, at any time, and that can cost you hundreds of thousands of dollars. In fact, that is the biggest driver of errors and omissions coverage. Most people buy it, mostly, for the defense coverage. Another thing about this line of coverage is that you must maintain continuous coverage in order for the coverage to work for you. If you have gaps in coverage, it’s going to void prior acts coverage, and really, that’s a total waste of money. So, once you’ve decided you’re going to take the leap and buy errors and omissions coverage, you really have to think about making that part of your budget going forward in order to maintain your protection. Talk to your agent about deductibles or retentions. There’s usually a fairly large deductible on errors and omissions coverage. Can range anywhere from $2500 up to even $50,000, or more, depending on exposure. Most policies that you will see are going to be in the $2500 to $5000 deductible range. That’s the basics of errors and omissions.