E&O: Errors & Omissions

Miscellaneous Classes/All Other

The miscellaneous professional liability (MPL) segment can be a significant opportunity for sales. The segment is composed of a wide range of types of professionals, many of which do not buy professional liability coverage now.

The segment is large and growing. Consumers and businesses rely on a wide and increasing range of professionals to provide various financial, business and personal services, and the rapid growth in these areas has led to an increased liability exposure. Professionals, regardless of the services they perform, always face the possibility that their work may fail to meet their clients' expectations. In today's litigious environment, all it takes is one dissatisfied client to place a professional's career and personal assets at risk.

Why is there an opportunity?

The changing market: Over the past few years, and especially recently, the market has become increasingly competitive. Coverages have been broadened and prices have dropped.

Many are bare: Many professional organizations, including most consultants, do not currently buy coverage. Typically this is because the professional questions the need or because they think that their General Liability coverage includes professional liability coverage.

Pricing: Some of these uninsured professionals are not aware of how affordable professional liability insurance has become, and others may be paying too much.

Mercator Risk Services Inc. ("Mercator" or "Mercator Risk Services")' exclusive program provides customized errors and omissions coverage to a wide range of MPL accounts. Our policies are tailored to meet the diverse needs of individuals and corporations engaged in a wide range of professions. In addition, for many accounts we can add other coverages, such as general liability and directors & officers coverage to our professional liability accounts.

Exposure

The exposure varies widely in the miscellaneous professional liability (MPL) segment based on the type of professional organization and the specific operating characteristics of the organization (Click here for listing). It is especially important in this segment to review the coverage provided to ensure that the professional organization has the appropriate coverage. For example, some types of consultants, such as certain consulting engineers, might require BI/PD coverage, coverage not normally provided in an MPL policy.

Do professional liability claims occur in this segment? Yes, but the frequency and severity vary by the type of professional and operating characteristics. If the professional services provided do not meet a client's expectations, disputes can and do occur. Sometimes these disputes can result in a client seeking compensation from all parties involved, whether responsible or not. The resulting dispute can cause:

The typical claim would involve a financial loss to a client due to a negligent error or omission by the professional organization. Errors can vary dramatically depending upon the type of operation and the particular situation. Examples of claims can be found by clicking on Claim Examples.

Often, a claim or lawsuit may not involve a clear error or omission. For example, a client is not happy with the result and brings a claim to obtain a different result or avoid paying a fee. These types of claims are often just as difficult and expensive to defend as a clear-cut error. Insurance typically pays for the cost of defending this type of claim as if it were a clear-cut error on the part of the insured consultant.

Professional Liability Insurance

Miscellaneous professional liability insurance, sometimes called errors and omissions or E&O insurance, is available from Mercator Risk Services' exclusive program and a wide range of specialty lines insurers. Coverage and pricing varies greatly depending upon the type of professional operation, the specific services provided and its size, location.

Specific coverage provisions are important for this coverage. Some professionals require coverage with special provisions to protect themselves from unique claims arising from their specialized services. As noted above, an engineering consultant may require a policy that provides protection for BI/PD claims, and many professional liability polices exclude these type of claims.

Coverage is typically provided on a claims-made basis. Limits and deductibles vary with the size and type of insured. Standard limits for most small to medium sized organizations start at $1.0 million, although limits as low as $250,000 are sometimes purchased. Premiums are set based on exposure base and other underwriting criteria. However, minimums are generally $1,000 for $1.0 million in limits.

Policy forms vary significantly, but typically are forms with defense costs included within the limit and deductibles. Coverage is typically provided on a claims-made basis due to the wide variability in exposures presented.

Examples:

Mercator has provided proposals to a wide range of MPL accounts, including professionals specializing in the following example areas (Click here for long class list):

Mercator Risk provides miscellaneous professional liability coverage for a wide range of specific professions. In fact, we offer coverage to more than 60 professional classes. From financial services and environmental consultants to safety, inspection, and testing services, and data processing/information services, Mercator Risk can help protect your clients against potentially costly E&O exposures.

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