The Different Types of Errors and Omissions Insurance

Errors and omissions (E&O) insurance policies are vital safeguards for professionals across several industries. They offer protection from potential legal claims that may arise from produced work. Claims can stem from several sources, including mistakes, failure to deliver goods or services as promised, and even allegations of negligence.

It's easy to see why selecting appropriate policies with adequate coverage is crucial, especially in today's litigious business environment. Here, we'll explore different types of errors and omissions insurance policies, and also tailored coverage options for a few popular industries.

Claims-Made vs. Occurrence-Based

The primary distinction in E&O insurance lies between claims-made and occurrence-based policies. We have a blog that covers this topic more in-depth, but here's a quick recap:

Claims-Made

Claims-made policies cover claims made during the policy period, no matter when the alleged error or omission occurred. That means an active policy must be in force when the incident is reported and the claim is made.

These E&O policies often include a retroactive date; incidents, reports, and claims made before that retroactive date are not covered.

It's also important to note that many businesses opt for tail coverage. After the policy expires or is canceled, the company can buy tail coverage, which extends the reporting period for claims related to incidents during the policy term.

Occurrence-Based

Occurrence-based E&O policies cover incidents during the policy period, regardless of when the actual claim is made or filed. If an error or omission happened while the policy was active, you're covered, even if the policy has expired by the time the incident is reported.

Because an occurrence during the policy period is automatically covered, there's no need to purchase tail coverage.

Industry-Specific Coverage

Different industries face different risks. That makes it imperative to tailor an E&O policy to your business's needs, regardless of whether you choose a claims-made or occurrence-based policy. Many businesses choose to have an E&O policy and professional liability coverage to ensure they’re protected.

Here's a quick look at some main coverage options for errors and omissions insurance available for various sectors.

Construction

Contractors

E&O insurance for contractors can help cover claims related to project management failures and design errors. This type of insurance is a good idea for contractors, subcontractors, and even construction managers who could face lawsuits for construction defects or delays.

Design & Construction Firms

Firms that offer design and construction work can benefit from E&O insurance, which helps protect them from issues like structural defects.

Manufacturing

Product Liability

Errors and omissions insurance can help protect against claims that products did not perform as expected or even caused harm.

Suppliers

Errors in a supply chain that impact production and delivery schedules may be covered by E&O insurance.

Nonprofits

Nonprofits should have errors and omissions insurance to protect leadership and maintain donor trust. Claims made against volunteers, board members, and employees may be covered, as well as errors that occur during fundraising activities.

Transportation

If you're involved in logistics, management, or cargo, E&O can help protect against any cargo loss, misdelivery, and delay claims.

Find the Right E&O Coverage With Hoffman Hanono Insurance

Selecting the proper errors and omissions insurance policy requires a thorough understanding of the specific risks associated with your industry. Hoffman Hanono has that knowledge and will help you secure comprehensive coverage that shields you from the financial fallout of legal claims. Get a quote today!