What will your E&O policy not cover?
Errors and omissions (E&O) insurance protects law firms and title agencies against malpractice claims. Too often, law firms, title agents, and other professionals report claims to their insurance provider only to get a rude surprise when the insurer determines that the claim is not covered.
Errors and omissions insurance policies include exclusions barring coverage for certain claims. It’s important to read through your E&O insurance to understand what is covered and what is not, so you can avoid issues not covered or get additional insurance to protect your firm or agency.
Here are the most common errors and omissions policy exclusions.
Intentional Harm or Wrongdoing
E&O policies typically cover claims arising out of any “wrongful” or “negligent” act, error, or omission related to the policyholder’s professional services. They also cover any failure to render professional services as promised or as expected.
Intentional acts of wrongdoing or harm are not covered by professional liability insurance. Most policies include an explicit exclusion for any claim arising from intentional, fraudulent, dishonest, or criminal acts. So, no matter how troubling a client might be, your E&O insurance will not cover damages claimed if you intentionally cause the client harm. Intentional misconduct can be in many forms, like refusing to return phone calls, misplacing a file, or intentionally missing important deadlines.
Bodily Injury and Property Damage
E&O insurance does not provide coverage for bodily injury and/or property damage arising from the rendering of professional services. Bodily injury is defined as actual physical injury, disease, or sickness sustained by a person. Property damage is defined as loss of use of tangible property or physical injury of tangible property.
If a client trips over an electric cord in your office, leading to a shoulder-breaking fall, or an employee gets a sprained ankle due to potholes in your parking lot, your E&O insurance won’t pay for their medical expenses or lost income. Likewise, if a client’s car gets damaged during a meeting in your office, E&O won’t cover costs related to its repair.
To protect your firm or agency from these risks, you must have general liability insurance and workers’ compensation insurance coverage.
Issues of fraud come in many forms in the insurance industry. These issues are relevant to determining the validity of claims and also determining if a policyholder made a timely disclosure of the claim at the inception of the insuring relationship. Errors and omissions policies purchased by attorneys and title agents contain a “prior knowledge” exclusion, which bars coverage for a malpractice claim that the policyholder knew about before the issuance of the policy.
A prior knowledge exclusion might assert that the policy doesn’t provide coverage for claims arising out of any negligent act, error, or omission occurring prior to the policy’s inception date if you knew or should have reasonably known that a negligent act, error, omission might be the basis of a claim or lawsuit. The “prior” component applies when your knowledge of the claim occurred before the effective date of your policy. A single prior knowledge claim could result in your insurer denying you coverage.
Errors and omissions insurance doesn’t cover any employment-related issues. Employment-related claims involve an employee or group of employees suing your company over wrongful termination, sexual harassment, workplace discrimination, defamation, demotion, breach of employment agreement, or any other unlawful or unjust treatments under the Employment Relations Act.
E&O insurance policies doesn’t cover acts, omissions, or negligent acts related to employment. It also doesn’t cover workplace injuries. It exclusively covers issues related to professional services rendered to clients. You’ll need an Employment Practices Liability Insurance (EPLI) for employment-related claims or workers’ compensation insurance for workplace injuries.
Failure to Protect Personal Information
Personal information is a valuable commodity in today’s digital world. However, a client’s sensitive data may fall into the wrong hands due to human error, negligent business processes, security failures, or cybercrime. A client might sue your firm for emotional distress, financial losses, or loss of privacy. Errors and omissions insurance policies will not cover the damages claimed.
In the insurance industry, marketing mistakes are referred to as “advertising injuries.” False advertising refers to misleading or deceptive marketing methods that fail to showcase the genuine attributes of a service. Advertisements influence a client’s hiring decisions but can be the basis of a claim or lawsuit if they are incorrect, far-fetched, or misleading.
The descriptions or guaranteed outcomes might not match the provided services. Many errors and insurance policies do not provide advertising injury coverage. Your general liability insurance may take care of your legal expenses when you’re accused of advertising wrongs.
Save Money with Comprehensive E&O Insurance
An errors and omissions insurance policy shouldn’t be treated as a blanket policy that provides coverage for every situation at every level. When purchasing a policy, you need to know what is covered and what isn’t to get ahead of certain liabilities.
For comprehensive errors and omissions insurance policies that will meet and match your exact coverage requirements, you can rely on Attorneys First Insurance. We only serve attorneys and title agents, providing better terms and coverage at considerably lower rates. Contact us today to get a free quick quote.