Professional Liability Insurance (also known in some professions as Errors and Omission Insurance or E&O Insurance) covers individuals who provide professional services, such as physicians and lawyers, from losses they incur as a result of being held responsible for the losses of their clients. This could result from claims of malpractice, error, or mistake committed or alleged to have been committed by the insured in his professional capacity.
Professional liability insurance is one form of protection for professionals and for their clients. Coverage will shield personal assets and will help maintain a good reputation through the defense of allegations of wrongdoing which might be frivolous or false. For the client who has suffered some damages through the actions of a professional, liability insurance will ensure that there are adequate funds available to make amends for the wrong that has been done. A professional liability policy covers errors, omissions or negligent acts which may arise from the normal or usual duties carried out by the insured. When the professional is an employee of a firm, the firm, as the employer, is responsible for the actions of the employee. However, a court of law may find a professional personally responsible for an incident that occurred due to an error, omission or negligent act committed by the professional as an individual.
Insurance Agent/Brokers E&O
Virtually all insurance agents and brokers are required by their insurance markets to carry professional liability, also called errors and omissions (E&O), insurance.
The typical insurance brokers professional liability claim is for failure to place coverage or failure to place adequate coverage. The specific situations vary considerably and usually occur when an insurer denies a claim.
Insurance brokers do have professional liability claims. The average claim frequency varies from one out of six to one out of eleven each year depending upon size, location, type and business. Overall, approximately one out of eight insurance brokers has a professional liability claim each year.
Severity varies greatly and is most impacted by the specific circumstances of the claim. The type of coverage provided by the broker to the claimant and the claimant’s industry also have a significant impact of the severity potential of a particular claim. For example, the severity of an insurance brokers claim for failing to place property coverage on an auto that has a tree fall on it is significantly less than the severity of a claim for failing to place coverage for a large ship that sinks.
Underwriting insurance brokers professional liability insurance requires a detailed look at the operations of the applicant. The basic exposure base used is typically either revenues or premium volume. Added to this base rate are a whole range of business and operating factors. The frequency and severity potential for a particular insurance broker vary greatly depending upon these operating factors. For example, the severity potential of the insurance business handled, as noted above, impacts the underwriting and rating factors. Other factors include location, management experience, prior claims, internal procedures and employee training.
Professional Liability for Real Estate Agents and Brokers
Milton Scott & Associates provides professional liability for all types of real estate agents and brokers. Because of our unique specialization in this area, Milton Scott & Associates can assist you in providing the best coverage at highly competitive rates for your real estate account.
Real estate agents and brokers professional liability insurance, sometimes called errors and omissions or E&O insurance, is available from Milton Scott & Associates. Coverage and pricing vary depending upon the type of professional operation, the specific services provided and the account’s size and location. The percentage of commercial property and the location can have a significant impact on pricing.
Specific coverage provisions are important for this coverage. Some professionals require coverage with special provisions to protect themselves from unique claims arising from their specialized services, such as consulting services.
Coverage is provided on a claims-made basis. Limits and deductibles vary with the size and type of insured. Standard limits for most small to medium sized organizations start at $1.0 million, and minimum premiums can run as low as $500. Policy forms vary significantly, but typically are claims-made forms with defense costs outside the limit and deductible.