Filling Gaps: Errors & Omissions for Contractors
At first blush, the very term “general liability” might strike you as a big enough blanket to cover just about any ordinary event from a insurance standpoint. After all, “general” is right there in the name, right?
Well, not so fast, friend.
A general liability policy does offer coverage of a fair scope of routine exposures, but not all. For those who make their living as contractors to outside clients, additional coverage in the form of an errors and omissions (E&O) insurance policy many times makes financial sense.An E&O policy for contractors covers the policyholder for negligent acts and omissions that may harm his or her clients. An E&O policy is also known as a professional liability insurance (PLI) policy, and is often deemed an essential coverage for professionals who provide a service for a fee.For example, say a contractor did a substandard job installing equipment for a business client. Under general liability coverage, it would be up to that contractor to replace the work at cost. But with E&O coverage, the contractor’s insurance provider would be able to pay the claim, thereby saving the contractor those out-of-pocket costs.E&O coverage fills a potentially significant financial gap for contractors. A word of warning, however – it can be difficult to acquire this additional coverage if the contractor has been subject to similar issues with clients in the past.It’s always a good idea to see where any possible gaps in your liability coverage may exist. Talk with the professionals at The Reschini Group to learn more.
Copyright 2020 The Reschini GroupThe Reschini Group provides these updates for information only, and does not provide legal advice. To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.
E&O: Human Nature Can Be Expensive
By Mike Drew, The Reschini Group
Errors and omissions. Sounds like the human race in three little words. We leave things out, we make mistakes. Human nature, right? Completely understandable and forgivable, right?
Wrong. No. Not when it comes to insurance, my friend. In this world, human nature can be expensive.
When completing an application and providing documentation as part of acquiring business-related insurance, if you leave out some item of material importance, or misrepresent facts – even if by an unintentional accident – and if that situation is discovered later, it could render the insurance policy null and void. That means claims would not be paid, and you would need to secure a new policy.Many insurers require specific applications for underwriting certain lines of business, to include language forcing the applicant to verify that the answers on the application are true and accurate and that all attachments and materials are considered representations and warranties of the applicant, and considered as physically attached to the policy. The insurer’s application also implicates that the insurer – by agreeing and accepting all of this information – will issue a policy relying on the truth and accuracy of such representations and warranties.In short, that means everything provided as part of the application had better be complete and truthful. The temptation may exist to try and skirt conveying the full picture (as in stating incomplete revenues, or misrepresenting the number of employees) in order to lower the cost of insurance premiums. But keep in mind that, should the full and accurate scope of the situation come to light, the cost may be far greater than any potential savings from misleading representations.It is critical to understand the questions asked on an application and how best to answer them. When requested to complete a specialized application other than an ACORD form, and to supply data requested for underwriting in conjunction with a specialized application, the need to consult a professional advisor becomes even more imperative.The team at The Reschini Group can assist with the completion of the application and request and gather the information necessary for the company to underwrite the risk and comply with the representations and warranties in the application. Contact us to learn more.
Copyright 2017 The Reschini GroupThe Reschini Group provides these updates for information only, and does not provide legal advice. To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.
Liable by Association: Understanding Professional Liability Insurance
By Mike Drew, The Reschini Group
A faulty assumption about insurance coverage related to job duties comes into play when one assumes he or she may be liable only when someone else suffers bodily injury, property damage, or personal injury. The fact is, however, that’s what standard general liability coverage addresses.
If you are a professional – which covers everything from architect to home inspector, from attorney to physician, and from real estate broker to accountant, just to name a few – a special classification of liability insurance is required to handle other types of claims that may come against you, related to giving advice or providing a service that could cause a financial loss to a customer. Membership in professional associations, some of which entitle an individual to list credentials as part of his or her name and identification, also point to the need for this type of coverage.Errors and omissions, another way to refer to professional liability, is defined as follows: "Errors & omissions in the U.S., is a form of liability insurance that helps protect professional advice- and service-providing individuals and companies from bearing the full cost of defending against a negligence claim made by a client, and damages awarded in such a civil lawsuit. The coverage focuses on alleged failure to perform on the part of, financial loss caused by, and error or omission in the service or product sold by the policyholder."For example, even a web programmer would be wise to have professional liability insurance. How so? Say the programmer delivers a website to a client, but if that platform did not perform properly – getting e-commerce transactions wrong, or not letting visitors to the site navigate to their intended destinations, resulting in lost revenue and a damaged reputation – the client could file a claim against the programmer, based on negligence, misrepresentation, violation of good faith and fair dealing, and inaccurate advice.A general liability policy would not be sufficient, since no one got physically hurt and no property had been damaged, so if the professional programmer only had this level of coverage, he or she would face a financial exposure that easily could have been avoided with the right policy.Be sure about your coverage. The professionals at The Reschini Group are well versed in these questions and how you can be adequately covered in any situation – including the ways in which you apply your professional expertise. Contact us to learn more.You’ve worked hard to achieve your professional recognition. It’s worth protecting, with the proper level of coverage.
Copyright 2016 The Reschini GroupThe Reschini Group provides these updates for information only. To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.
E&O: Human Nature Can Be Expensive
By Kitti Peters, The Reschini Group
Errors and omissions. Sounds like the human race in three little words. We leave things out, we make mistakes. Human nature, right? Completely understandable and forgivable, right?
Wrong. No. Not when it comes to insurance, my friend. In this world, human nature can be expensive.When completing an application and providing documentation as part of acquiring business-related insurance, if you leave out some item of material importance, or misrepresent facts – even if by an unintentional accident – and if that situation is discovered later, it could render the insurance policy null and void. That means claims would not be paid, and you would need to secure a new policy.Many insurers require specific applications for underwriting certain lines of business, to include language forcing the applicant to verify that the answers on the application are true and accurate and that all attachments and materials are considered representations and warranties of the applicant, and considered as physically attached to the policy. The insurer’s application also implicates that the insurer – by agreeing and accepting all of this information – will issue a policy relying on the truth and accuracy of such representations and warranties.In short, that means everything provided as part of the application had better be complete and truthful. The temptation may exist to try and skirt conveying the full picture (as in stating incomplete revenues, or misrepresenting the number of employees) in order to lower the cost of insurance premiums. But keep in mind that, should the full and accurate scope of the situation come to light, the cost may be far greater than any potential savings from misleading representations.It is critical to understand the questions asked on an application and how best to answer them. When requested to complete a specialized application other than an ACORD form, and to supply data requested for underwriting in conjunction with a specialized application, the need to consult a professional advisor becomes even more imperative.The team at The Reschini Group can assist with the completion of the application and request and gather the information necessary for the company to underwrite the risk and comply with the representations and warranties in the application. Contact us to learn more.
Copyright 2016 The Reschini GroupThe Reschini Group provides these updates for information only. To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.