Errors and Omissions (E&O) insurance protects law firms from bearing the full cost of potential claims made against them while providing professional services. This insurance cover is aimed at protecting professionals or entities against claims for business errors or negligent acts.

What is covered by errors and omissions insurance?

A lawsuit against an attorney can be financially devastating to any individual or law firm that does not have errors and omissions coverage. E&O insurance protects the assets of law firms and individual lawyers.

E&O policies cover what are called “wrongful acts.” Under this type of policy, wrongdoing is defined as an act, error or omission that occurs in the provision of professional services.

Errors and omissions insurance also covers negligence or breach of duty of care between the client, third parties and the professional. It requires legal professionals to make decisions not only in good faith and in a reasonable manner, but also financially, ethically and legally.

Why do lawyers need E&O insurance?

Every lawyer’s worst nightmare is being sued. Whether it’s a disgruntled client, a miscommunication, or a genuine mistake, claims happen. And they happen when they are least expected.

The reality is that we are all human and mistakes happen to the best of us. There may be missed deadlines, conflicts of interest and errors in communication.

Additionally, despite your best efforts, clients may see situations differently than expected. The client may feel as if their fiance is being abused. They may not have confidence in the investigation or discovery on their behalf. Or the client may have felt as if they did not know or apply the law.

Are you feeling dizzy yet? If so, you are not alone.

Mine simply spun and listed possible scenarios.

This is why E&O insurance and understanding your coverage options is so critical to protecting your law firm.

E&O insurance was created to cover otherwise devastating economic losses for business professionals such as lawyers. In the event of a claim, they will either reimburse the insured or pay covered damages and defense costs on behalf of the insured.

The need for E&O insurance increased dramatically as potential exposures continued to grow across the country.

Over the years, there has been a steady increase in malpractice claims against lawyers. According to the American Bar Association, four out of five lawyers will be sued for malpractice at some point in their careers.

This in turn has increased the need for lawyers to seek cover against financial loss that may result from an error or omission arising from their professional liability.

How to Get Errors and Omissions Insurance

After you understand what E&O insurance is and why it’s important, you may be wondering how do I get a policy?

For attorneys looking to obtain errors and omissions insurance, I recommend starting your search on the American Bar Association website. The ABA website has a state-organized directory of insurance agencies and carriers.

The ABA Directory provides details on each insurance provider, their underwriting limitations, law firm size guidelines, deductible limits/options, and policy endorsements.

It is best to research the insurance companies listed and view their respective websites separately. While the directory is a great place to start, you can learn a lot about any particular E&O insurance provider from their website.

To find the right insurance to suit your needs, you should consider the following:

Reputation of the carrier

The first thing to consider when purchasing errors and omissions insurance is choosing a reputable carrier. One resource you can use to determine if a carrier you’re considering is reputable is to check their A.M. Best rating. The AM Best rating provides insight into the financial stability of insurance companies. It is best to choose an insurance carrier with an A rating or higher.

Another thing to consider when choosing a carrier is how they handle complaints and what resources they have available for support and/or advice. While efficient and effective claims handling is important, finding a carrier that also provides solid risk management resources will help you avoid a claim in the first place.

Range

When it comes to putting an errors and omissions policy in place, the “amount” of insurance you have is crucial. There are many coverage options to consider, and choosing the appropriate liability limits for your law firm is a major step in obtaining insurance.

No two law firms are the same, so each law firm must decide on the amount of insurance coverage that best suits them.

The amount of coverage needed for a criminal defense attorney is not the same as the amount a personal injury attorney should carry. Likewise, a large law firm has different coverage needs than a small law firm. Each law firm’s risk level is different, those with a higher risk area of ​​practice or a larger legal practice should consider higher limits.

Price

When buying anything we all want to know how much will it cost me?

Unfortunately, I can’t give a definite answer when it comes to insurance for the costs of errors and omissions. The price of insurance depends on many factors. Just as no two law firms require the same coverage, no two law firms have the same insurance premiums.

Understanding the many factors that determine the price of insurance can help you estimate where you might fall on the insurance spectrum, but the only real way to find out how much you’ll pay is to get an insurance quote.

Everyone wants the best possible deal on their insurance, but customers need to be aware that low prices can sometimes come with insufficient coverage. You’ll want to review the policy without making assumptions and understand what the policy covers and what it doesn’t.

Next steps

Having and maintaining an errors and omissions policy is an essential part of a long-term business plan. As a lawyer and business owner, your law firm is one of your most valuable assets and protecting it is very important.

I hope that after finishing this article I have given you a solid understanding of what errors and omissions insurance is. But I also may have opened a whole pandora’s box of questions.

If you’re new to errors and omissions insurance, you undoubtedly have a lot to learn. While I’d like to think this article has given you all the information you need to know, I want to point you in the right direction for ev.