AXIS INSURANCE SERVICES, LLC: Ask The E&O Experts
Errors and Omissions
- What Is Errors & Omissions (E&O) Insurance?
- What Does Errors & Omissions Insurance Cover?
- Why Should My Firm Purchase Errors & Omissions Insurance?
- Why Buy Errors & Omissions Insurance from Axis Insurance Services, LLC?
- How Much Does E&O Cost?
- How Do I Find the Right Errors and Omissions Insurance Policy?
- How Do I Get an Errors and Omissions Insurance Policy?
What Is Errors & Omissions (E&O) Insurance?
Errors and Omissions Insurance is business liability insurance for professionals such as insurance agents, real estate agents and brokers, architects, third party administrators, consultants and many other business professionals.
All E&O insurance policies are unique and therefore have different coverages and exclusions. However, in general E&O insurance is designed to help pay for defense costs and the damage awards associated with professional liability claims. Even the most diligent professional can be held liable for a professional error, omission or mistake. Defense costs are a significant portion of the cost of an errors and omissions insurance policy. It is not uncommon for a professional to spend thousands of dollars on defense costs for a matter that ultimately gets dismissed.
What Does Errors & Omissions (E&O) Insurance Cover?
A Professional Liability claim must allege negligence in either the performance of or failure to perform professional services. Errors and omissions policies have a specific limit of liability and usually include both legal costs and damage awards in a single limit. E&O insurance does not cover intentional, fraudulent or illegal activities or in most policies, punitive damages. All policies are unique, therefore, not all claims are covered and you should review your policy very carefully.
Why Should Should My Firm Purchase Errors and Omissions Insurance?
Lawsuits aren’t just about negligence; they are about allegations of negligence. We live in a litigious environment where any professional can be sued. Many innocent parties are brought into a suit simply because they are part of a transaction. In other words, the alleged error or omission does not have to be your error or omission. Defending your company’s reputation, whether the allegation is frivolous or not can still result in lost productivity and legal costs exceeding hundreds of thousands of dollars.
Errors and Omissions insurance allows you plan ahead and transfer a portion of the risk of unpredictable legal expenditures to the insurance carrier, reducing the financial impact of an allegation against your business.
Why Buy Errors & Omissions from Axis Insurance Services, LLC?
We specialize in Errors & Omissions insurance and have direct access to top-tier carriers. Most of our competitors rely on other brokers. Our professionals have years of experience and don’t need to rely on other companies for our expertise.
At Axis Insurance Services, we analyze the risk of our clients based on what services they provide and develop solutions designed specifically for their needs. Our firm and its agents service clients nationwide, in almost every industry.
How Much Does E&O Cost?
Errors and omissions insurance premiums are based on several factors:
- Type of Professional Services Provided
- State where Services are Provided
- Annual Sales or Revenues
- Number of Professionals Providing Services
- Loss / Claims History
Don’t be fooled by price alone. You could find yourself purchasing a cheaper policy that excludes some of the professional services you provide – this would render the policy useless. Defense costs are a significant portion of an E&O insurance policy’s cost and you could easily spend thousands of dollars on defense costs for a matter that ultimately gets dismissed.
Each E&O insurance carrier has a different policy form and different exclusions. A properly structured E&O policy will offer your business proper protection with a competitive price for those coverages.
How Do I Find the Right Errors and Omissions Insurance Policy?
The first step to finding the right Errors and Omissions insurance policy is to find the right insurance broker. You wouldn’t use a tax attorney to defend a civil suit; likewise you should not use a workers’ compensation insurance agent to find the right E&O insurance policy for your company.
You should use an agent that specializes in E&O insurance to review your Professional Liability risk. Interview your agent and assess their qualifications and understanding of the industry. They should have specific knowledge in dealing with your specific type of industry and have the background, references and insurance markets to assist you.
When choosing the right E&O insurance policy you and your agent should work together to consider several factors, including:
- What Professional Services do you provide?
An E&O insurance policy should cover all of the specific services you or your company provide. For example, if you are a commercial real estate agent, a property casualty insurance agent or even a structural engineer – it makes a huge difference in the policy you choose. Your errors and omissions insurance policy should spell out the professional services you provide.
- What is the legal structure of the business offering the Professional Service?
Whether you are a Sole Proprietor, Corporation, Partnership, Limited Liability Company or other entity, you must determine who should be covered under your errors and omissions insurance policy. For example, corporations have shareholders whereas LLC’s have members. Not all E&O policies address such issues correctly.
- What About Professionals Performing Services on Behalf of our Company?
Companies use employees, independent contractors, outside vendors and other professionals to fulfill a contract. Many E&O policies don’t cover services provided by those deemed outside the corporate entity. Some policies will cover the services of independent contractors, but will not cover the independent contractors themselves. An E&O insurance policy that excludes coverage for independent contractors would leave the business to face extreme risk.
- What Professional Services are provided by or to Related Parties?
Some companies provide professional services to related parties. An example of a related party would be a real estate agency, where the real estate agency also manages a property owned by the broker. In an insurance agency, a related company might process claims. In both cases, with the wrong errors and omissions insurance policy, the insured would be left unprotected.
How Do I Get an Errors and Omissions Insurance Policy?
It starts with filling out an application and may also require submitting financial statements or management bio’s, depending upon your industry or company size.
If you would like to learn more about E&O Insurance or would like to get an application, you can visit our website at www.axisins.com. Speak with one of our professionals – call us at 201-847-9175 or email us at [email protected]. We will be happy to help protect you and your business from risk.