ERRORS AND OMISSIONS INSURANCE IN TEXAS

What is errors and omissions insurance?

Professionals may be held financially liable if they give clients errant advice that results in substantial losses. Errors and omissions insurance may help Texas professionals shield themselves from this type of risk.

Errors and omissions insurance is specialized professional liability insurance for professionals. The insurance will usually help pay court fees, attorney fees and settlements from covered claims.

What Texas professionals need E&O insurance?

E&O insurance is primarily purchased by professionals who regularly provide advice. Any Texas professional who gives advice (as opposed to applying a skill) might want this insurance.

The following are a few examples of professionals who primarily offer advice, and might thus want an E&O policy:

Attorneys, paralegals and legal secretaries
Financial advisors, investment advisors and estate planners
Insurance brokers and agents
Real estate brokers and agents
Trustees

Medical providers are a good example of professionals who need different professional liability insurance. Although doctors advise patients on treatment options, they also apply specialized skills learned during medical school and residency. A medical malpractice policy will likely protect against these risks much better than a standard E&O policy would.

Professionals who are unsure whether they should purchase E&O insurance or another professional liability insurance can get advice from a knowledgeable insurance agent. An agent who specializes in E&O insurance will be able to recommend the most suitable type of professional liability policy, whether that’s an E&O policy or something else.

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What types of mistakes are covered by E&O policies?

E&O policies typically protect against a variety of mistakes that professionals could make. For instance, a policy with the right terms may offer coverage in scenarios such as:

A real estate agent forgets to mention that a house is a designated historic landmark, which prevents the homebuyer from renovating the house as they want to
A paralegal misses the deadline for sending documents to opposing counsel, which jeopardizes their client’s case against their opposition
An investment advisor makes a fat finger error that they don’t notice, which results in substantial losses for their client
An accountant mis-transposes figures when preparing tax documents, which results in large penalties and interest years later

Exactly what mistakes a particular E&O policy protects against depends on the terms and conditions of a policy, and many policies have specialized terms for specific fields of work. An experienced insurance agent can help professionals find a policy that’s specialized for their particular field.

What does claims made coverage mean in an insurance policy?

A lot of E&O policies are underwritten as “claims made” policies. Claims made policies generally determine coverage according to when a claim is filed, as opposed to when an incident allegedly occurred. Basing coverage on when a claim is filed might make sense if the exact timing of an incident is difficult to determine.

When reviewing the coverage period of a claims made policy, professionals should pay special attention to two details:

Retroactive Date: Many claims made policies have a retroactive date. Such a date is the earliest date that an incident could have occurred to be covered by a policy. A claim might not be covered if the incident clearly occurred before the retroactive date, regardless of when the claim is filed.
Tail Coverage: Many claims made policies also have tail coverage. Tail coverage extends the period during which claims can be filed, beyond the end date of the policy. Should a claim be filed during a tail coverage period, the claim may still be covered. Tail coverage is similar to a discovery period, which can also extend beyond a policy’s end date.

How can professionals in Texas get errors and omissions insurance?

For help purchasing errors and omissions insurance in Texas, contact the independent insurance agents at Wise Insurance Group. Our agents will work closely to identify the types of mistakes you want to be covered, and then we’ll help you find a policy that provides robust protections for many of the mistakes you could make.