Errors and omissions extensions
We know that professional services such as accountants, financial planners and engineers require professional indemnity insurance to protect them for the advice they provide, however the exposure or alleged exposure for financial loss is not isolated to professional services such as these. In fact, due to new and emerging processes and industries, this is becoming an increasingly more expansive exposure to many more companies. This is where the Errors and Omissions (E&O) extension on a general liability policy can potentially come into play.
What does Errors and Omissions cover?
A manufacturer may be subject to claims for alleged financial loss arising from a faulty batch of products that has caused a loss of income for their end customer. The typical insuring clauses under a standard liability policy being personal injury, property damage, and advertising injury would not be triggered or respond to this incident.
E&O protection, however, will provide cover for claims for financial injury, including loss of use of others’ tangible or intangible property, such as data and other electronically stored information.
Industries with potential E&O exposure
Manufacturers
Packaging companies
Companies that offer advice
Companies that supply raw materials
Examples of incidents that may trigger an E&O claim
Incorrect labelling
Incorrect installation
Faulty product
Items not produced to specification
Services such as maintenance, installation, design, and delivery increase a client's potential E&O exposure.
Growing risk
As more digital and automated manufacturing processes are being utilised so too has the rise of E&O exposure for manufacturers as the failure of automated monitoring systems can easily lead to a batch of faulty products being released to market before the error has been identified.
How can Solution help?
We can offer E&O extensions for businesses providing non-fee related advice, e.g., providing product selection advice as part of a product sale, and for manufacturers of most general products.
Cover is offered on a claims-made basis and has a retroactive date applied. We can provide sub-limits of $250,000 or $500,000 (aggregate) as standard but higher limits are available upon request.
What to include in your submission
When requesting E&O cover, it’s helpful for brokers to provide us with the insured’s quality control procedures as this gives peace of mind that products are being inspected, reducing the likelihood of faulty products being released to the market.
Also, where an insured is manufacturing components rather than final products, it helps us to assess their E&O exposure by understanding who the client supplies their components to, determining the end product and user.