5 Common E&O Insurance Claims

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Also known as professional liability insurance, E&O insurance covers customer claims against you alleging financial or reputational losses due to a service you provided and lawsuits alleging misconduct, negligence, errors, omissions, and failure to deliver services as promised.

Here are five real-life E&O insurance claims our clients experienced and how their insurance helped them recover quickly:

1. Travel Agent E&O Claim

One of our policyholders is a travel agent. While one of their customers was on vacation, their return flight time changed, and the travel agent missed the notification. As a result, they did not inform their customer of the change to their return flight.

It cost their customer over $3,000 to catch a flight home, so they sent a letter to the travel agent demanding payment for the flight.

Outcome: Our travel agent client had E&O insurance that reimbursed their customer for those costs.

2. Architect E&O Claim

Another one of our clients is an architect. One of their customers requested a renovation design from them, which was sent on the condition the architect would be notified before the project began to do a site inspection. 

However, their customer went ahead and did the renovation without first notifying the architect. Since a site inspection was not done before renovation work started, the property was deemed unsafe, as there were errors in the original architectural design. The architect’s customer sued them for damages.

Outcome: Our client’s E&O coverage kicked in to assist, covering over $14,000 in costs to defend the architect against being held fully liable for the issues and required repairs. Their legal defence was successful, and the policy covered an $8,500 settlement to the claimant after they accepted partial liability.

3. Accountant E&O Claim

We have many accountants in our client base. One of them had their customers provide incomplete documentation, and our policyholder incorrectly thought they had received their customer’s full financial statements.

This error led to fines for their customer after they filed their taxes, which resulted in them losing business opportunities when they could not obtain additional financing. The customer threatened the accountant with legal action.

Outcome: Our client’s E&O policy paid for an insurance adjuster to review the situation and manage negotiations with their customer. These negotiations reduced their customer’s demand by over $70,000. Our accountant client’s policy then covered over $60,000 of damages their customer incurred.

4. Consultant E&O Claim

One of our consultant policyholders was hired to inspect a site where another business had caused pollution contamination. Their job was to confirm the extent of the contamination, which they did.

Later, the business that caused the contamination was sued, and our consultant policyholder was named in that lawsuit despite not being liable. 

Outcome: Their E&O insurance provided funds for the consultant to defend themselves against the allegation that their professional operations or any error on their part caused the contamination. Over $10,000 in legal fees were covered, and they were released from the lawsuit.

5. Home Inspector E&O Claim

We count many professional home inspectors among our clients. One of them submitted a report to potential home buyers, along with a disclaimer that the inspection was visual only and additional inspections may be required on specific parts of the property. In that report, they flagged some issues with the plumbing system that warranted repair or further inspection.

The home buyers decided to purchase the property and discovered significant issues within the plumbing system – none of which would have been visible to the inspector. The buyers sued the home inspector for the cost of repairing the damages despite the report they received notifying them of the plumbing-related issues.

Outcome: Our home inspector’s E&O policy paid for their legal defence against the claim. The policy covered over $7,000 in legal fees for their lawyer to successfully argue the home inspector was not liable for the damages.

How to Get Low-Cost Errors and Omissions (E&O) Insurance Quickly

No matter what line of work you’re in, if you provide services or advice to your customers, you should have E&O insurance as part of your overall business insurance policy.

Zensurance can quickly obtain low-cost E&O insurance, which our brokers will customize to suit your specific requirements.

Fill out an online application for a free quote in less than five minutes.

Get the protection you need to focus on serving your customers without worrying about expensive claims against you, whether warranted or not.

– Reviewed by Mohammad Samin, Sr. Claims Advisor, Reagan Elly, Sr. Claims Advisor, and Brandon Bowie, Team Lead of Professional Lines, Zensurance.