Errors and Omissions Insurance in Massachusetts
What is errors and omissions insurance?
When clients seek the advice of professionals, they expect that advice to be sound. If the advice is errant, clients might decide to sue the professional they hired. Errors and omissions insurance may help protect professionals in Massachusetts from this risk.
Errors and omissions insurance offers tailored professional liability coverage for when giving advice. If there’s a covered error, a policy will likely help with legal fees and any settlement.
Who in Massachusetts should consider getting E&O insurance?
E&O insurance is primarily for Massachusetts professionals who offer advice. Most people giving advice should have coverage, in case they ever make a mistake that costs their client.
For some examples, E&O policies are often purchased by professionals working in the following fields:
- Legal (e.g. lawyers, mediators, paralegals)
- Real Estate (e.g. agents, brokers)
- Finance (e.g. advisors, wealth managers, financial counselors)
- Tax (e.g. CPAs, tax preparers)
- Consulting (e.g. college consultants, business consultants)
- Other FIduciaries (e.g. guardians, conservators, trustees)
In certain situations, contractors might also want an E&O policy for when they advise customers on projects.
What types of situations does E&O insurance protect against?
Exactly what an E&O policy will insure against depends on that policy’s terms, and these vary depending on the professional’s industry and particular policy. With the right terms, a policy might cover situations such as the following:
- Investment advisor fails to follow their client’s investing parameters, resulting in a substantial loss for the client
- Real estate agent fails to inform their client of a property’s zoning restrictions, preventing the client from using a purchased property as intended
- Attorney accidentally sends the wrong file to a judge, potentially jeopardizing an aspect of their client’s case
- Tax preparer mistypes a figure when preparing a client’s return, resulting in underpayment that leads to fines and interest later on
- Media consultant fails to confirm that a commercial complies with all regulations, resulting in fines after the commercial airs
What’s “claims made” E&O insurance?
A large number of E&O policies are underwritten as “claims made” policies. This generally indicates that the timing when a claim is filed, rather than the timing when an incident occurred, is used to determine coverage eligibility.
If a claim is filed during a policy’s effective period, the claim may be covered even if the incident occurred before the policy was purchased. This is different from occurrence based policies, which usually limit coverage eligibility to incidents that occur while the policy is in place.
WIth claims made policies, however, there are a couple of other terms that typically impact eligibility.
One such term is the “retroactive date,” which normally is the earliest date that a claim could have occurred and still be covered. An incident occurring prior to the retroactive date probably wouldn’t be covered, even if it was filed while the policy was in effect.
“Tail coverage” may extend the time during which a claim can be filled beyond the policy’s term, potentially adding many years of protection.
Can medical professionals get E&O coverage?
Medical care usually falls outside of what E&O policies are designed to protect against. Medical providers normally need medical malpractice insurance instead. This is still something that an E&O agent should be able to help with.
How are the costs for E&O coverage determined?
The premiums for E&O policies are based on many factors, not the least of which is the professional’s industry and work. Years of experience, certifications, any claims history and other details can all impact cost.
To find out how much they’ll pay for E&O insurance, professionals should check policy options with an independent insurance agent.
Where can people working in Massachusetts get errors and omissions insurance?
If you’re a professional in Massachusetts and want to review E&O options, contact the independent insurance agents at PIKE Insurance. Our agents will help you find an errors and omissions insurance solution that’ll keep you well protected against the risks that an error can pose.
