Considerations When Purchasing an E&O Policy

Considerations When Purchasing an E&O Policy

Despite having multiple risk control measures in place to protect your firm’s liability, things can still go wrong. You can commit mistakes or errors that could end up in a lawsuit from unforgiving clients. Other than catering to the legal proceedings, you might have to pay for any financial complications your business caused the client. We’ve outlined these considerations when purchasing an E&O policy in the article below.

Since most of these damages cost upwards of a thousand dollars, having E&O insurance could help your business cater to these unexpected expenses. While E&O insurance is optional in some industries, it is mandatory in others. In other cases, business partners or clients might not work with you if you lack coverage.

If none of these situations apply to you, then the fact coverage protects you from your mistakes and those of your employees are reason enough to purchase it. Choosing the right E&O policy for your firm is easy as long as you know what to look for.

Here are three factors to consider when purchasing E&O insurance:

Your Insurance Provider’s Track Record and History

You can tell a lot about an insurance agency from their record. Ideally, you want to work with an agency that will quickly cater to your claims with little friction. Feel free to read through are true customer reviews on our Google Review page.

With decades of experience in the insurance industry, we strive to make the insurance buying process fast, easy, and for you! Meaning you log on to our website or mobile phone app (coming soon), obtain multiple quotes in minutes, and bind! After you’ve read through our reviews it’s easy to see this is the experience we provide.

At InterWeb Insurance we provide our customers access to insurance protection and risk management with integrity and excellence. Our customer-centered approach offers the highest level of personal service from every member of the InterWeb Insurance team, complemented by our 24/7 convenience of advanced web technology.

What E& O Coverage Will Work Best For Your Firm?

There are two types of E&O insurance policies: occurrence and claims-made insurance. The business insurance you settle on will affect the cost and the life cycle of the coverage. Occurrence-based policies will protect your business against losses that occurred while the policy was active, even though the claim is made after dropping the coverage. 

On the other hand, claim-made policies cater to events that occur when the policy is still active. The claims should also be made during the lifetime of the policy. Once the policy expires or you drop it, you lose coverage for any incidents, regardless of when it occurred. If you would still want coverage for events that transpired during an expired policy’s lifetime, you will need to purchase an extended reporting period (ERP), which is a one-time purchase.

While claims-made policies have lower initial premiums, occurrence-based policies are simpler to own since you will be automatically covered long after dropping a policy. Claims-made policies are often attracted to small firms that can benefit from the lower costs, especially if they don’t intend to cancel the policy. In case you run a large firm with more assets at risk and some disposable income, occurrence-based policies are ideal.

What Does an E&O Policy Cover and Exclude?

When buying E&O insurance, the devil lies in the details. It would be counterproductive to buy an insurance policy that doesn’t protect you from a risk you are most likely to face. For instance, some policies might cover your employees, but limit the amount of coverage they offer them. Generally, there are a few items that are excluded from E&O insurance policies, including:

  • Illegal acts
  • Employee lawsuits
  • Employee injuries
  • Punitive damages
  • Guarantees and warranties
  • Malicious acts and intentional wrongdoing


Some exclusions are actually industry specific. For instance, most E&O policies do not cover errors like misquotation of prices for travel agents. Take time reading through the policy documents to understand what you are walking into.

E&O insurance is crucial for your firm, especially if you are in a high-risk industry. You never know when you will need the E&O policy, so best to be prepared before it’s too late. Our helpful team is here for you, give us a few details below and we can get started today! Still have questions? Call our customer service team at (866) 277-7162