Common E&O Terms
Selecting Errors and Omissions insurance can be complex, as some of the words which are bandied around have special meanings. To help understand the terms, the following is a selection of some the most commonly used terms and how they apply to E&O Policies.
Be aware, Definitions vary from policy to policy and from carrier to carrier. The material in this publication does not bind the company in any manner. The coverage is subject to the language of the policy as issued. Programs or products may not be available in all states and policy features may vary by state.
Please consult us to review the policy for coverage limitations, restrictions, exclusions, terms and conditions.
Errors and Omissions (E&O) Insurance
An insurance form that protects the insured against liability for committing an error or omission in performance of professional duties. Generally, such policies are designed to cover financial losses rather than liability for bodily injury (BI) and property damage (PD).
Claims Made & Reported Policy
A policy providing coverage that is triggered when a claim is made against the insured, and reported to the carrier, during the policy period. When a retroactive date is applied to a claims-made policy, the wrongful act that gave rise to the claim must have taken place on or after the retroactive date. Most professional liability (E&O) policies are written as claims-made policies. All professional liability policies purchased through McGowanPro are claims made.
An amount the insurer will deduct from the loss before paying up to its policy limits.
The definition of what a claim is varies from policy to policy and carrier to carrier. Generally, a claim is a demand for money or services received by the named insure arising out of an act or omission in the performance of professional services. A claim also can include the service of suit or the institution of an arbitration proceeding against the named insured.
Any compensatory sum, including a judgment, award and/or settlement (provided any settlement is negotiated with the Company’s written consent). Damages many times includes punitive or exemplary amounts, to the extent such amounts are insurable under the applicable state law.
A proceeding before any state licensing board, local board, association or other governmental body regulating professional conduct, alleging misconduct in providing professional services. Disciplinary action does not include criminal charges.
Loss of Earnings Expense
An amount paid by the insurance company for loss of earnings to the Named Insured for each day, or part of a day, the Named Insured is in attendance, at the Company’s request, at a trial, hearing, mediation or arbitration proceeding involving a claim against the named insured. This is subject to a per day, per claim, and per policy period maximum. Please refer to your policy for details.
Named Insured means the person or entity specified on the Declarations page.
Policy period means the period of time from the effective date shown on the Declarations to the earliest of the date of termination, expiration or cancellation of this policy.
Professional services means services performed for others by the Named Insured in their professional capacity. Please refer to the terms and conditions of your policy to determine what professional services are covered, and by whom.
Reputation Protection Expenses
Any reasonable fees, costs and expenses for consulting services paid to an external public relations firm whose engagement is limited to the adverse effects of negative publicity against the Named Insured caused by a Reputation Event.
Any actual or alleged negligent act, error, or omission that the named insured reasonably believes will have an imminent and materially adverse effect on the total revenues of the professional services of the named insured that may diminish confidence by its customers based upon unfavorable information made available through television, radio broadcasts, or published in writing, provided that such written media was in general circulation available to the public.
A payment for expenses incurred while assisting the insured in responding to a subpoena which the insured first receives and reports in writing to the company during the policy period resulting from the performance of professional services by the Insured.
The unauthorized access to, or use of data containing private or confidential information in connection with the performance of professional services which results in the violation of any privacy regulation. Please refer to your policy to determine coverage.
The material in this publication does not bind the company in any manner. The coverage is subject to the language of the policy as issued. Programs or products may not be available in all states and policy features may vary by state. Please consult your insurance broker and review the policy for coverage limitations, restrictions, exclusions, terms and conditions.