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Professional Liability/E&O

Screen Shot 2013-05-29 at 10.28.54 AMWhat is E&O insurance?

Errors and Omissions (E&O) is the insurance that covers your company or you individually, in the event that a client holds you responsible for a service you provided, or failed to provide, that did not have the expected or promised results. For doctors, dentists, chiropractors, etc., it is often called malpractice insurance. For lawyers, accountants, architects or engineers, it may be called professional liability. Whatever you call it, it covers you for errors (or omissions) that you have made or that the client perceives you have made.

Colorado’s Mortgage Broker’s Errors and Omissions Insurance

As a mortgage broker practicing in Colorado, it is important to note that new licenses will not be issued, and previously existing licenses will not be renewed without proof of the state-prescribed minimum coverage.

Most Errors and Omissions policies cover judgments, settlements and defense costs. Even if the allegations are found to be groundless, thousands of dollars may be needed to defend the lawsuit. They can bankrupt a smaller company or individual and have a lasting effect on the bottom line of larger companies.

In short, Errors and Omissions coverage provides protection for you in the event that an error or omission on your part has caused a financial loss for your client.

Who needs Errors and Omissions insurance?

The best-known professionals who need Errors and Omissions insurance are doctors, lawyers, mortgage brokers, accountants, architects, engineers, etc. However, advertising agencies to commercial printers, Web hosting companies to wedding planners should also consider Errors and Omissions coverage. If you are in the business of providing a service to your client for a fee, you have an Errors and Omissions exposure. You may want to consider what will happen if the service is not done correctly or on time, and it costs your client money or harms their reputation.

Why does my company need coverage?

To put it very simply, everyone makes mistakes. Even with the best employees and the best risk management practices in place, mistakes will be made. No one is perfect.

Below are a few real-life examples of Errors and Omissions losses:

  • A Computer Consultant was hired to create a new computer system for a client. The client alleged that the new system was not functional and corrupted their current system.
  • A Mortgage Broker failed to process a loan application on a timely basis which resulted in the borrower losing an agreed upon rate. The rate increased and the borrower was unable to secure a comparable rate resulting in significant excess interest paid.
  • A Safety Consultant professional liability claim resulted when the claimant alleged the insured’s critical inspection report was not comprehensive enough to have prompted the client to take precautionary measures to avoid an explosion that resulted in injury and death.
  • A private school hired a Management Consultant to assist them with employee recruitment activities. The suit alleges the insured performed an inadequate background check and failed to identify the employee’s criminal history which included sexual assault on a minor.

By not purchasing Errors and Omissions insurance, a company can be taking a serious financial risk. These types of losses are not covered under a general liability policy. And, as stated earlier, even if you are not at fault, litigation is both time consuming and expensive.

*The above illustrate potential loss scenarios and are based on actual claims. Insurance coverage ultimately depends on the facts of each claim and the policy term, conditions & exclusions.

When should you buy Errors and Omissions insurance?

As with any insurance, the best time to buy an Errors and Omissions policy is before the risk is taken. If you are in the service industry and you know you will have the exposure, make Errors and Omissions insurance a part of your insurance portfolio. Many contracts with clients will require insurance to be in place. In some cases, it is a selling point with your clients. It gives them the peace of mind of knowing they will be compensated if there is an error or omission.

Where do you find Errors and Omissions coverage?

Since 1967, RSS Insurance has provided specialized business coverage for professions across the board, including specialty Errors and Omissions insurance programs. Like you, we hold ourselves to the highest industry standards. In doing so, we have partnered with quality insurance companies that can provide you with industry-leading coverage at the most competitive costs available. As a broker, we offer you the value of broad based market access for your Errors and Omissions insurance needs.

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