What to Expect From Your E&O Policy

Any business that offers professional services or advice understands that E&O coverage is not so much an option as it is a necessity. New Jersey errors and omission liability policies cover businesses from claims of negligence and failing to fulfill professional duties. Unfortunately, E&O claims can arise even if a business does everything right, which is why coverage is so important. With that said, even those who invest in E&O insurance don’t fully understand what a policy does and does not cover. Hopefully, this article will clear things up.

What is Covered?

Errors and omission insurance covers defense costs incurred as a result of a claim, actual or alleged acts of negligence (think: copyright infringement, software failure or failure to adequately represent a client) and claims arising from business-related services. It also covers claims stemming from services rendered by employees or contractors, claims arising from services rendered in the past and settlements and damages resulting from a single claim. As you can see, E&O coverage is no different from malpractice insurance for doctors or professional liability coverage for lawyers. In fact, it is the same type of coverage; it just goes by a different name.

What is Not Covered?

Like a professional liability policy, New Jersey errors and omission liability policies do not cover acts of fraud, false advertising or employment matters. Additionally, E&O insurance doesn’t cover bodily injury, property damage or issues related to patents or trade secrets. Each of these items is covered by separate policies, which you should discuss with your insurance provider when strategizing ways to best protect your business.