Who needs E&O or Professional Liability Insurance?

• Any business that gives advice or provides services should consider adding this coverage, including Real Estate, Accounting, Consulting, Architecture, Engineering, Tax Services, Insurance Agencies, Marketing Agencies, Attorneys, to name a few.

What Does E&O or Professional Liability Insurance Cover?

• It is a type of liability insurance that protects your business if someone accuses you of negligence, malpractice, errors or omissions. It reimburses the costs of legal fees, damages, and financial settlements, if covered by your policy, after your deductible, up to your limits, if not excluded from your policy.

What Isn’t Covered by E&O Insurance?

• Intentional wrongdoing, deliberate misconduct, fraudulent behavior, or criminal acts.
• Physical injury and property damage claims that may be covered by general liability insurance.

Examples of Typical E&O Claims

• Failure to complete expected tasks. Problem: The customer did not understand the scope of work clearly.
• Failure to provide correct guidance. Problem: The customer claims the company provided inaccurate, incomplete, or misleading information or guidance.
• Failure to meet promised results. Problem: The results forecast by a professional service are not met.

Hanover’s Tips to Limit E&O Claims

• Create and follow detailed contractual agreements.
• Communicate effectively, correctly, and regularly.
• Screen employees and third-party vendors to make sure they are insured, licensed, experienced, and well-trained.
• Train employees in E&O exposures and best practices.
• Stay up to date on industry licensing, regulations, and best practices.
• Avoid providing services or advice outside of your expertise.
• Maintain detailed records of transactions and communications.

Hanover’s Elements of a Well-Written Contract

• The format of the contract should include an offer, an acceptance, and the cost.
• All parties, fees explained in detail, and the timing of services, including start and completion.
• Scope of the work, terms and conditions, and identify each party’s responsibilities.
• Clear identification of when the contract is complete and what happens in the event of a breach.
• Signatures and execution of the contract, and keep copies.