Errors and omssions (E&O) is the insurance that covers your company, or you individually, in the event that a client holds you responsible for a service you provided, or failed to provide, that did not have the expected or promised results. For doctors, dentists, chiropractors, etc., it is often called malpractice insurance. For lawyers, accountants, architects or engineers, it may be called professional liability. Whatever you call it, it covers you for errors (or omissions) that you have made or that the client perceives you have made.
Most E&O policies cover judgments, settlements and defense costs. Even if the allegations are found to be groundless, thousands of dollars may be needed to defend the lawsuit. They can bankrupt a smaller company or individual and have a lasting effect on the bottom line of larger companies.
In short, E&O coverage provides protection for you in the event that an error or omission on your part has caused a financial loss for your client.
Under the CAPS Group Insurance Programs, members can purchase E&O insurance on its own; however, CGL can only be purchased in combination with E&O. These insurance policies are designed to complement one another. Combined E&O and CGL coverage provides a total liability package and a very cost-effective risk management solution. CGL protects against bodily injury, personal injury (libel & slander) and property damage to third parties.
CGL coverage is triggered by a lawsuit resulting from the negligent actions of an owner, director, or employee. However, CGL coverage does not respond to lawsuits related to professional services or pure financial losses. E&O insurance will protect against claims not covered by CGL, including lawsuits related to professional services or pure financial losses.
The CAPS E&O policy covers errors, omissions, or negligent acts which may arise from the professional services and advice offered by insured members. Allegations, whether or not factual, the legal costs to defend a civil law suit, and any compensatory damages awarded are also covered with this combined coverage.
Purchasing BOTH CGL & E&O Insurance will ensure your business is fully protected against liability claims, and not exposed through gaps in coverage.