Errors and Omissions Insurance in Connecticut

What is errors and omissions insurance?

Advising clients comes with risks, as even the most knowledgeable professionals could make mistakes. Errors and omissions insurance may help protect professionals in Connecticut if they give errant advice.

Errors and omissions insurance is tailored for professionals who could make mistakes when advising clients. Policies usually pay lawyer fees, court costs, and settlements if there’s an error.

Who in Connecticut should consider E&O insurance?

E&O insurance is primarily for Connecticut professionals who advise clients in some way. Most who offer advice should have coverage, as a single significant mistake could result in a costly lawsuit.

Some examples of professionals who give advice, and therefore could likely benefit from this coverage include:

• Attorneys, mediators, and paralegals
• Financial advisors, financial counselors, and asset managers
• CPAs, accountants, and tax preparers
• Real estate brokers, real estate agents, and home inspectors
• Management consultants, IT consultants, and college admissions consultants
• Conservators, guardians, and conservators

Those who are also trained in an advanced skill usually need a slightly different type of professional liability coverage. For instance, doctors usually need medical malpractice.

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What situations would be covered by an E&O policy?

What an E&O policy covers depends on a particular policy’s provisions, and the field a professional works in. Depending on these, policies might cover events like:

• Financial advisor enters the wrong type of order (e.g. buy instead of sell)
• Real estate agent forgets to mention restriction on a property (e.g. historical designation)
• Home inspector misses a major problem with a property (e.g. leaky roof or cracked foundation)
• Paralegal makes a clerical error negatively impacting a case (e.g. missing a deadline)
• CPA types a decimal in the wrong place (e.g. when reporting gross income)
• Media consultant fails to confirm the regulatory compliance of an advertisement

What are “claims made” E&O policies?

“Claims made” E&O policies focus on when a claim is filed rather than when an error occurred. Coverage may be provided so long as the claim is filed within the policy period, and the error did not occur before a specified retroactive date. The retroactive date can be before the policy is purchased.

Many E&O policies are claims made policies. This both ensures more coverage than other types of policies, and lessens the need to determine the exact date when a mistake was made.

What are “occurrence” E&O policies?

“Occurrence” E&O policies focus on when an error occurs when determining coverage. These usually only cover errors that occur while the policy is in effect, differing from claims made policies.

What’s a “retroactive date” in an E&O policy?

The “retroactive date” in an E&O policy generally marks the earliest date an error could have occurred for it to be covered. Errors made before this date typically aren’t covered, even under a claims made policy.

What’s “tail coverage” in an E&O insurance policy?

“Tail coverage” generally extends the date when a claim can be filed, going beyond when a policy ends. Some claims made policies offer tail coverage, which can vary in duration, and a few occurrence policies might too.

An insurance agent who specializes in E&O policies can help professionals choose a retroactive date and any tail coverage that makes sense for them.

How are the premiums for E&O insurance determined?

The cost of E&O insurance varies based on factors such as the professional’s industry, certifications, experience, and claims history. Professionals should consult with an independent insurance agent to get specific quotes. An independent agent can check quotes from several insurers, showing coverages and costs.