In order to protect themselves from the possibility of future litigation,
many types of professionals should consider purchasing Errors & Omission
(E&O) insurance, also called Professional Liability insurance. If
a client ever claims that a mistake was made that ended up costing them
money, they could turn around and sue the professional for negligence.
Having this insurance can help pay for lawyer fees and damages if there
is ever a lawsuit, which even when unfounded can be time and money consuming.
Here’s how it works: an E&O insurance policy is triggered by
certain negligence-based “occurrences.” If a professional
is ever accused of negligence by a client, their E&O policy may help
cover the cost of fighting the claim. It is important to bear in mind,
however, that in order to be covered by the policy, it must have been
active both when the complaint was made AND when the alleged incident
occurred. This means that if the professional started work for the client
before they purchased coverage, they will likely not receive benefits.
In a recent article published on line via Insureon, Attorney
Thomas J. Simeone lends his expertise to the subject of E&O claims. Using the example
of a draftsman designing something for a client, he brings up an interesting
consideration that many people miss. Consider, for instance, a drafting
professional who designs something for a client in one year and then inspects
it another year, and fails to detect a problem both times. Which failure
counts as the “occurrence?” “The actual date of malpractice
or an occurrence is definitely open to interpretation and subject to litigation,”
says Mr. Simeone.
It is a good idea for professionals to talk to their insurance providers
about retroactive coverage. This can provide coverage for any work performed
before the start of your policy. You can go back as far as you want, but
because most states have statutes of limitations on negligence claims,
you may only need to go back a few years. Mr. Simeone advises that you
talk about your needs with your insurance provider.
For more information and advice in E&O claims from Attorney, adjunct
law professor, and certified CPA Thomas Simeone, check out
Why Draftsmen Need E&O Before Design Work Begins, available online via Insureon.
To get in touch with Thomas Simeone or another attorney at Simeone &
Miller, LLP, please call our office at (202) 888-0872.