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How to Protect Yourself with Errors & Omission (E&O) Insurance

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.