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Cheaper isn't better when protecting against miscellaneous E&O

Long gone are the days when a "professional" could hang his or her shingle on a door and be open for business without a worry of being sued. Today, Americans are suing first and

By David J. Price | Updated on July 29, 2008

Long gone are the days when a “professional” could hang his or her shingle on a door and be open for business without a worry of being sued. Today, Americans are suing first and asking questions later. And when it comes to these lawsuits, the burden of proof rests on the shoulders of self-employed business owners and consultants, which is why it’s so important to have the right insurance coverage.

Many professionals, particularly those who are new to consulting, may be unfamiliar with miscellaneous professional liability (also known as miscellaneous errors and omissions) coverage. The professional liability marketplace is a highly competitive and creative segment of the insurance industry, and agents must be aware of the coverage available, recognizing the professional exposures that may exist among their clients.

The standard market is tapping into the miscellaneous E&O market, and in some cases, offering lower premiums for this coverage to unsuspecting professionals. Agents must educate insureds on their exposures, coverage details and risks when reviewing coverage. If not, agents put themselves at risk for a professional liability claim as well. Agents should not fall into the trap of the “cheapest is best” mentality, but rather look for the broadest form of coverage to meet the needs of their insureds.

Case in point: An insured can reduce costs by transitioning from a policy that provides outside limit defense coverage to a policy with inside defense limit coverage. However, the agent must carefully explain what this change means.

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