What is E&O Liability Insurance and is it needed in Texas?
Professional liability insurance (PLI), also called professional indemnity insurance (PII) but more commonly known as errors & omissions (E&O) in the US, 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.
If your company offers services to regular customers or if you have a unique product or service your business is based on, E & O insurance is vital. Accidents will happen. Mistakes will be made. The last thing you want is to be held liable for costly legal fees when a client or customer is unhappy with your product or service. An Errors & Omissions insurance policy provided to you through Texas General Insurance will keep you financially safe during these unavoidable situations and help you prevent the embarrassment and loss of business due to a costly claim against your Texas company.
E & O coverage is not included in a general commercial liability insurance policy or any other commercial package but is an affordable addition to your commercial policies.
Which E&O Insurance is best for my Texas Business?
Many professionals and businesses across Texas are in need of E&O insurance. Texas General Insurance Agency understands that each industry professional carries a different need for E&O liability coverage, including protection for:
- Banker’s Professional Liability
- Financial Advisors
- Hedge Funds
- Insurance Agents
- Investment Bank Liability
- Mortgage Field Inspectors
- Premium Finance Company Liability
- Accountants
- Advertising Agency
- Arbitrator / Mediator
- Architect and Engineer Liability
- Bookkeeper / Tax Preparer
- Building Inspectors
- Claims Adjusters
- Contractor Professional Liability
- Franchisors
- Graphic Designers
- Real Estate Consultants
- Environmental Consultants
- Home Inspectors
- Law Firms
- Manufacturing
- Mortgage Brokers/Bankers
- Private Investigators
- Property Appraisers
- P&C Agents E&O
- Real Estate Agents
- Real Estate Appraisers
- Real Estate Developers
- Recruiters
- Title Agents
- Home Healthcare
- Adult Daycare
- Dentists
- Physicians and Surgeons (Medical Malpractice)
- Oil & Gas Consultants
Errors and Omissions Insurance Texas
This type of policy is ideal for most businesses that sell or deliver a service, which leaves the door open to damages claims made by clients.
The purpose of an E&O insurance policy is to protect companies from financial loss in the event of a claim for negligent error or omission. The coverage can be complicated and will vary depending on your specific business and location, but there are a few areas that work for most E&O insurance policies:
- Claims Made – The claims made coverage limits apply only to the policy period during which the claim is made against you.
- Occurrence – Most E&O policies will have an occurrence form of coverage. This means that the injury or damage would occur during the policy period.
- General Aggregate – This is a per accident or claim limit of your E&O insurance Texas coverage.
- Products/Completed Operations – With this type of coverage, the injury or damage has to occur because of something you did while providing a service. For instance, if you were to install a faulty appliance in a home, it caused damage or harm during its lifetime.
TYPES OF INFORMATION THAT NEED TO BE INCLUDED IN YOUR ERRORS & OMISSIONS HOLDINGS AGREEMENT:
- The name of the insured (the Settlor)
- The name of the policyholder (the Trustee)
- The Assured; in this case, the name of your business or company
- The type of information to be held on file for inspection during an audit by underwriters
- The information you wish to be held confidential in its entirety, in other words, the information that should not be disclosed to other parties, even upon a request by the insured.
- The persons to whom the policyholder (the Trustee) may disclose information concerning you or your business as well as those individuals or companies that are expressly excluded from such disclosure
- A detailed statement as to whether any restrictions will be placed on the use of information held in confidence
- The extent to which your business will disclose the information it considers confidential to its employees, agents, or representatives
- Any other additional terms that you may wish to include concerning confidentiality and usage of information by third parties
- You also need to specify whether the policyholder (the Trustee) has a right to disclose the information it considers confidential. In other words, can the policyholder (the Trustee) use or release information that is considered confidential to companies to who your business owes money?
Understanding the benefits of this policy will help you decide whether it’s right for your business. Errors and omissions insurance Texas will provide a financial safety net should a claim be made against you by a client. In the event of a claim, this policy can help settle costs associated with damage or injury caused by an error on your part.
Texas Errors And Omissions Insurance FAQS
Q: Do I need E&O insurance in Texas?
A: In Texas, no state law mandates businesses carry E&O insurance. However, many businesses purchase E&O insurance to protect themselves from the financial risks associated with errors and omissions. We always recommend businesses carry E&O insurance, which is integral to any business’s risk management strategy. By protecting against potential lawsuits, E&O insurance can help businesses avoid costly legal fees and damages.
Q: How much does E&O insurance cost?
A: The cost of an E&O policy will vary depending on the type of business, the coverage limits, and the deductible. For small businesses, E&O insurance may cost around $500-$1000 per year. For larger businesses, the cost of E&O insurance can be much higher, often reaching thousands of dollars annually.
Q: Is E&O insurance paid monthly or yearly?
A: Most E&O policies are paid yearly. This means you will need to pay the premium all at once, usually at the beginning of the policy period. Some insurers may allow you to pay the premium in monthly installments, but this is typically more expensive.
Q: What does E&O insurance cover?
A: E&O insurance can cover various claims, such as negligence, misrepresentation, breach of contract, etc.
It can also protect companies if one of their employees is accused of wrongful acts. In some cases, E&O insurance can even cover punitive damages.
Q: How long does an E&O policy last?
A: E&O policies typically last for one year, after which they must be renewed for coverage to continue. But some insurers offer multi-year policies with terms of up to three years that are less expensive than purchasing separate policies each year.