Professional Errors and Omissions Insurance is a type of errors and omissions insurance protects business professionals whose clients could claim damages as a result of the business professionals' faulty performance. The faulty performance may be because of a negligent act, error, or omission by the professional.
Professional Liability Insurance - Beware of a Lapse in Coverage
If you have a professional liability (errors & omissions) policy, lapsing your policy for even one day can leave you open to a potentially devastating lawsuit down the road. Most E&O policies are written on "claims made" basis. This means that the policy covers claims that are reported during the current policy period, even if the claim happened in the past. However, there are two criteria that need to be met in order for the insurance company to respond to the claim. First, you must have a E&O policy in force at the time a claim is made. Second, you must have had continuous E&O coverage from the time of the incident to the time the claim is reported.
The starting date of your continuous coverage is called the retroactive date which is the earliest date an event would be covered. Usually, this is the date you first started your E&O policy. However, should you lapse your policy for any period of time, and then start another policy at a later date, your retroactive date is reset to the date the new policy started. So, if you let your E&O policy lapse, you will not be covered for claims that occurred prior to your new retroactive date, even though you had insurance at that time.
As an example, suppose you had an E&O policy in force for 5 years. In your 6th year, you let your policy lapse due to financial reasons. Sometime after that, your policy is reinsated. In your 7th year, you receive a letter from an attorney representing a former client. Apparently, the former client is unhappy with some work you did 4 years ago and is suing you for $100,000. You submit the claim to your insurance company and are shocked to hear that the claim is being denied, even though you had insurance at the time you did the work for the client. Due to the lapse in your policy and subsequent re-instatement, your retroactive date is now the date of the re-instatement and not the date your first policy started 7 years ago. As a result, you may be personally liable for the suit of $100,000 plus defence costs.
Here are a few thing you can do to prevent your E&O policy from lapsing.
If cost is an issue, find a broker that specializes in professional liability insurance who can shop for a premium that you can live with. Remember that retroactive dates are portable and will follow you even if you change insurance companies.
Set up a renewal reminder notice using your calendar or contact management system. You should allow sufficient time (1 to 2 months) to budget for the premium or allow your broker to shop for a better rate.
To find out more about professional liability insurance and other insurance products, visit the Insurance Resource Centre.
Article Source: http://EzineArticles.com/?expert=Ron_Cseh
All businesses will have some type of professional liability insurance for claims made by clients. Most of these claims have something to do with negligence. Accountants, physicians, architects and lawyers all will have a high level of coverage. You may be aware of this type of coverage for physicians is called malpractice insurance. Real estate companies will have a type of errors and omissions policy.
These policies provide coverage pertaining to omission of products, financial loss because of error, breach of warranty, security, intellectual property, personal injury and a failure to perform. Some other claims deal with inaccurate advices, misrepresentation, violation of good faith and fair dealing and negligence. A general liability policy will cover personal injury, advertising injury, bodily injury, and property damage.
All professionals are expected to have the correct technical knowledge needed to perform their job. If they cannot maintain their practice to within the expected skill level then they issues may occur where liability insurance is needed. It is possible to get professional liability insurance for home businesses, business owners, endorsements and homeowners.
When choosing providers you will need to determine what coverage is offered under each policy. There are different areas and coverage from criminal, administrative and civil policies. You can easily find information on providers by using the Internet. Another important factor is the type of service they provide and the claim filing procedures and well as who makes decisions about claims, how long it takes for the entire claim process to be completed, how you obtain legal defense and more.
Many times it is the company that is sued and not the individual that made the mistake, though there will be consequences for that individual. Many times the person claiming the injury may have made the claim but cannot substantiate it. You need to realize that in any business the company will do what is necessary for it to succeed and if that means sacrificing an employee then they will hand you your pink slip.
One popular type of professional liability insurance is errors & omissions insurance. Make sure you get more than one business insurance quote when you are shopping for professional liability insurance, to ensure you are getting the best rates.
Article Source: http://EzineArticles.com/?expert=Caressa_Waechter
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