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Errors and Omissions Insurance

Errors and Omissions Insurance in Vermont

What is Errors and Omissions Insurance?

In their day-to-day work, professionals are exposed to risk by simply practicing their craft. If they ever make an error, they can be sued for the losses that the error causes. In fact, professionals can be sued for an alleged error even if they never make a mistake. Errors and omissions insurance protects Vermont professionals from covered lawsuits over alleged or actual errors in their work.

Errors and omissions insurance is a type of professional liability insurance that’s designed for professionals who primarily provide advice. If a professional’s advice proves to be bad advice, clients may seek financial compensation for any loss they incur. Errors & omissions insurance provides protection against covered claims regarding a professional’s advice.

Errors and Omissions Insurance Vermont

What Professionals in Vermont Need Errors & Omissions Insurance?

Almost any professional who primarily earns their living by providing advice should consider errors & omissions insurance. The list of professionals who may benefit from this kind of insurance includes:

  • Lawyers
  • Insurance agents
  • Real estate agents and brokers
  • Stock brokers and investment advisors
  • Insurance agents and financial planners
  • Appraisers
  • Trustees

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What Types of Claims Do Errors & Omissions Insurance Policies Cover?

The exact types of claims that a specific errors & omissions insurance policy covers will depend on what type of professional is being insured, as well as the particular terms and conditions of the policy. Here are some example scenarios that a policy might provide coverage for:

  • A real estate agent failed to provide a client with all the available information on a Vermont property the client purchases, and the client later learns the property isn’t zoned for their intended purposes
  • An attorney writes down the wrong date for filing a case, and the client’s case is lost because the deadline is missed
  • An accountant transposes a figure incorrectly when filing a client’s taxes, and the client has to pay penalties and interest as a result
  • A stock broker doesn’t execute a client’s order quickly enough, and the client suffers a significant loss as a result

Errors and Omissions Insurance Vermont

What is a Claims Made Insurance Policy?

Because determining exactly when an error was made can sometimes be difficult, errors & omissions insurance policies are usually “claims made” policies. Claims made policies generally cover claims based on when the claim is made, rather than when the error occurred. In other words, most policies cover claims that are initially filed within the policy period.

There are two common exceptions to this general rule. First, underwriters usually include a retroactive date that determines the earliest date a covered error could be made. This is often the initial date of the policy period, as insurers typically don’t cover issues that arose prior to when a policy was purchased.

Second, some policies have discovery periods that extend coverage beyond the final date of a policy period, as long as the initial error occurred during the policy period. A discovery period may be a few months, such as three to six months, or, in special circumstances, several years.

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How Can Professionals Get an Errors and Omissions Policy?

Claims made policies, with their retroactive dates and discovery periods, can be complex. To ensure they get good coverage, professionals should work with a knowledgeable insurance agent who’s licensed in Vermont. An agent will be able to review all of the terms and conditions of an errors and omissions insurance policy to make sure it provides the protections that a professional needs.



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