Errors and Omissions Insurance in Texas

What is errors and omissions insurance? 

Professionals who advise clients for a fee face certain risks. If bad or wrong advice is given, the professionals may be held liable for losses incurred by the client. To help protect against this risk, professionals in Texas may want errors and omissions insurance.

Errors and omissions insurance provides tailored liability coverage for professionals who offer advise. Policies may protect against a variety of errors that could be made when working with clients.

Which professionals in Texas does E&O insurance make sense for? 

E&O insurance is generally for professionals who give advise, as opposed to practice a skill. Most Texas professionals who are paid for their knowledge and expertise should consider this coverage. For example, those working in the following sectors may want a policy:

• Legal Sector (lawyers, paralegals, mediators, legal secretaries)
• Financial Services (financial advisors, wealth asset managers)
• Tax Services (certified public accountants, tax preparers)
• Real Estate (agents, brokers, property managers)
• Trust Management (conservators, guardians, trustees)

Contractors might also benefit from E&O insurance if they regularly make recommendations to clients. Whether E&O makes sense for a contractor depends on their particular risk mitigation needs, though.

A knowledgeable insurance agent can help contractors and others decide whether it makes sense for them to carry an E&O policy.

What scenarios are typically covered under E&O insurance? 

The coverages that E&O policies have can protect against a variety of situations. Depending upon a policy’s terms, the following sorts of incidents might be covered:

• A buyer is unable to utilize a property as anticipated because a real estate agent didn’t verify the property’s zoning.
• A lawyer’s client has their case jeopardized because the office accidentally sent confidential statements to opposing counsel.
• A financial advisor’s client sustains a large loss because the advisor executed the wrong type of order (e.g. buy instead of sell).
• A tax preparer’s client owes back taxes, interest and fees because of a mistyped figure on their tax return.
• A marketing firm’s client faces a lawsuits and fines because a media consultant didn’t check whether the client’s ad complied with legal regulations.

What’s a “claims made” E&O policy?

E&O policies commonly operate on a “claims made” basis. The phrase generally means a claim may be covered so long as it’s filed within the policy’s active period, even if the action in question occurred outside of the policy’s period. This coverage is helpful if it’s unclear when exactly an error was made.

There are, however, limitations to claims made policies. A couple of terms to be aware of are:

• Retroactive Date: Typically marks the earliest date an error can occur for a subsequent claim to be eligible. Errors taking place before this date usually aren’t covered, even if filed during a policy’s effective period.
• Tail Coverage: Typically extends the timeframe for filing claims beyond the policy’s expiration date. Claims lodged during this extension period are usually eligible for coverage. 

Because details such as these can significantly impact what claims would be covered, professionals show work with a knowledgeable insurance agent when choosing a policy. An agent who specializes in E&O will be able to explain how specific details might affect coverage in a particular situation.

How much are premiums for E&O policies?

The premiums charged for E&O policies vary according to numerous different factors. A professional’s field of work, experience, services offered and past claims history are merely some of the details that can impact cost.

Professionals can find out how much their E&O coverage will cost by comparing customized quotes with an independent insurance agent.