We’d like to thank Dale Moore, Client Relations Director and Michael Hale, President of CPLIC at www.cplic.net for providing answers to initial E & O questions posed by members at ClaimSmentor which we share with our blog readers as well today. Please feel free to pose additional questions in reply to this blog posting and we’ll get Dale to answer them in reply to this guest blog entry!
1) Question: Is Errors and Omissions (E & O) occurrence based? Does it only cover what happens during the policy period?
Answer: A few companies do offer E & O on an occurrence form but most professional liability insurance, of which E & O is a part, is written on a claims made basis and has been since around 1985. On a claims made policy you can purchase retrospective coverage back for as long as you have been continuously insured. Since this cost money you should look at the statue of limitations where you do your work and buy what you need. Then as long as the inspection that you made or the event occurs that brings about a claim is within the retrospective period and you report to your carrier as soon as the claim is made against you, coverage at the time of your report would apply.
2) Question: How long should the policy be kept in effect to cover one?
Answer: The coverage should be in effect when you first start handling claims and should remain in effect by annual renewals until you retire or leave the business. Most companies will offer you a one, two or three year extended reporting period after you cease handling claims for any reason which will apply to any claims brought against you during that time as long as the error occurred before you elected to start that extension.
3) Question: What are the normal limits of Liability?
Answer: Most companies offer limits from $500,000 to $5,000,000. Most adjusters buy limits that are required by their clients as they do not have those size assets to protect.
4) Question: What are minimum and maximum limits?
Answer: A few companies will insure you for limits lower than $500,000, say $100,000 or $250,000 but not many above $5,000,000. To obtain limits above you would buy an excess policy.
5) Question: Do the different states regulate E & O?
Answer: If you insure with a traditional insurance company that is admitted in the state that you do business then your state would regulate that insurance company. Increasingly, adjusters are choosing to belong to and be insured by the only Risk Retention Group specifically created for adjusters. As a Risk Retention Group it is regulated by the state of domicile and registered in all other states.
6) Question: What are the policies for Florida?
Answer: Many of the traditional insurance companies would use the ISO forms to support their policies. Some of the surplus lines companies may use some type of manuscript. Claim Professionals Liability Insurance Company, RRG uses a manuscript policy written specifically for independent claim professionals and it may be viewed at www.cplic.net by clicking on the bar for policy.
7) Question: If I already have E & O and work a storm for a company that offers E & O, what happens then?
Answer: Your E & O is to protect you. The company you are working for may also have a program that will protect you but you will have to see and read their actual policy to be sure. However, their policy would not normally protect you from claims brought by them against you. You are always better protected to have coverage specifically in your name.
8) Question: Are attorney fees and court costs covered by E & O?
Answer: A primary policy would cover defense costs if the claim against you is covered. Defense costs would include both.
9) Question: Are costs to travel to a different jurisdiction for depositions or court appearances covered?
Answer: When your insurance company instructs you to travel that cost is generally covered; however, your lost income is not generally covered. You will have to look at the specific language to be sure.
10) Question: Is E & O higher when you are new and does it go down with experience?
Answer: The basis for charging for the coverage is generally the revenue you produce. Therefore, your premium will generally increase as you become more productive.
Note that we also think this article from Sept 2007 which includes quotes by another CPLIC representative to be excellent info on E and O as well over at the Roughnotes.com site:
Direct contact information for Dale if you are more comfortable directly contacting them is:
Director Client Services
CPLIC, RRG & Carter Claims
17742 Irvine Blvd., Ste 102
Tustin, CA 92780