Errors & Omissions insurance (E&O) is the insurance that covers the insured’s business entity or the insured individually, in the event that a third party (typically a client or customer) alleges that the insured is responsible for a service the insured has provided, or failed to provide, that did not have the expected or promised results and caused damages.

Now E&O insurance is expanding to reflect more complex business risks.

Panelists at the American Bar Association’s annual Tort Trial & Insurance Practice Section’s Insurance Coverage Litigation Committee meeting earlier this year talked about several emerging trends in the field of E&O coverage.

As professional liability risks become more complex, many insurers are working from a base E&O policy that is then tailored with additional coverage components that are targeted to the specific needs of the insured.

Computer Hacker Silhouette Of Hooded ManCybersecurity is a leading concern, according to industry participants. Many E&O policies provide only limited coverage for cyber attacks or a data breach. As more insurers develop standalone cybersecurity policies, insureds may want to closely examine their business risk levels and compare them with coverage provided in existing or new policies.

Industry experts note that first party expenses are generally not covered by E&O or commercial general liability (CGL) policies, which could result in a significant coverage gap if the insured is subject to a cyber attack.

In another trend, real estate agents and other professionals are increasingly being targeted in sophisticated scams being referred to as “social engineering fraud” claims, according to panelists. As one example, a real estate agent holding funds in escrow for a client may receive wiring instructions via email. Assuming the email to be legitimate, the agent follows the instructions to transfer client funds. Only later do they learn that they have been the target of a social engineering fraud.

These social engineering fraud claims may be viewed as the next-generation phishing attack. Fraudsters can now use published networks of professional connections, such as LinkedIn, in combination with public record data to introduce deceptive practices into various transactions.

Real estate agents, insurance agents, attorneys and other professionals will want to document caution in the execution of transactions. Insureds and their carriers will also want to review policy provisions and limits on a regular basis.

Click on the link read about Bill Hager’s expertise in regard to errors & omissions (E&O) insurance.


Material for this article was taken from a collection of industry sources relating to the subject.
In all of the general statements here, see the state law of the controlling jurisdiction. Every case is different and circumstances vary widely depending on the governing state law, policy provisions, and related considerations.

This blog is provided for educational purposes only. It is not intended to provide legal advice or an opinion in regard to any topic discussed. The blog should not be used as a substitute for legal advice from a licensed attorney in your state.