Errors & Omissions Insurance?...--> HELP! :)

cchipster

Hello-

I am in property clean out business and am finding out alot of companies like to see "errors and omissions" insurance along with my general liability?

I am finding that insurance agents COMPLETELY disagree that I need this coverage for my line of work, but the companies I am applying for require it clearly.

Can anyone shed some light on this? Maybe a place to get a cheap rate, maybe info on how it works and what you are paying?

Any info would be greatly appreciated! Thanks in advance!

Chip Brault
RadiantPropertyEnhancement.Com

ScipioAfricanus

Why in the he11 you would need E & O insurance for what you do is simply beyond me.

That kind of insurance is mainly needed for Architects and Design Drafters like me in case some HO, GC or sub screws the pooch on a job and needs to find a fall guy. (sorry guys just kidding)

E & O is pretty expensive too. My liability policy for a Mil. costs me about 2.2K yearly and the E & O is a little more.

Find out why they need it, I'll bet they really don't if you press them.

Andy.

rbsremodeling

Some of the Asset management companies require E&O insurance. There is a lady that post here called Linda look in her post it may have that answer or maybe shoot her an email she seems to be very helpful.

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AtlRemodeling

It appears from your website that you also do home inspections. That is the reason for the E&0 insurance. All of the home inspectors I know have this type of insurance and last time I checked into it (a few years back) it was rather costly.

Astrix

E&O insurance is also known as Professional Liability insurance and it provides you with coverage for claims made against you because of professional advice or consulting services; the Error part being wrong advice you might give and the Omissions part being not giving or forgetting to give full advice. You won't be able to get this insurance unless you are a professional in your field; for example, a doctor giving medical advice or an architect giving architectural advice. A barber won't be able to get lawyer's E&O insurance even if they give you off-the-cuff legal advice while cutting your hair, because they don't have the credentials; they didn't pass the bar and they don't have a university diploma hanging on the wall.

Your insurance agent is probably telling you that you don't need this coverage because there is no professional requirement in your business doing property clean-up.

But, if you are being asked for E&O insurance on certain jobs, you need to look at what the job is and what the professional exposure is. If you are only doing clean up work but the job is actually asbestos abatement, aren't you supposed to have the correct environmental abatement credentials?

I review a lot of contracts for contractors in my job and a lot of times I see an E&O insurance requirement where it is not needed, but the job owner is just using a standard type contract. As part of the service to our insurance clients, I will call the job owner and explain to them why the coverage doesn't apply depending on the specific job and get the E&O requirement removed. Maybe you could ask your insurance agent to help intervene if the jobs you are going after truly don't have any kind of Professional Liability exposure.

Hope this helps.

cchipster

Thank you for your input! Guess Im not going to get it right now...

things are going so far so good without...

Hardly Working

So lets say you've got a work order for a lock change and you drill out the lock change it out add the lock box and post your notice. Oh you drilled out the lock on the wrong house...opps. What if it was rekey, winteriztion little ol' Martha my not be to happy about that one.

Thats why you get E&O.

Some vendors offer it through their companies ask about it.

Cover your Assests.

Astrix

Excuse me for disagreeing with you Hardly Working, but your example would not be an E&O claim.

When people pay money for consultation services, there is a higher degree of responsibility. You pay an engineer to review and maybe change drawings before stamping them because there is the expectation that they have the extra education and knowledge to notice and correct errors that would probably be overlooked by the constructors.

A simple way to differentiate between an Errors & Omissions Liability claim and a standard Commercial General Liability claim would be that the E&O claim was caused by the person thinking and talking, while the CGL claim was caused by them using their hands and doing physical work.

Example of E&O claim: You come up with an idea for a new roof design that has only 8 trusses instead of 10. After the roof is built, there is a heavy snowstorm and the roof collapses.

Example of a CGL claim: You build a roof and while the drawings show 10 trusses, you only constructed 8.


Another issue:

In the above example of the roof being incorrectly built, this would only be a covered CGL claim if something subsequently happens that causes third party property damage or bodily injury. Furthermore, only secondary damage would be covered. Any damage to the item or area that was incorrectly worked on would not be covered.

So, if you double-checked the drawings after construction was complete and now realized you made a mistake, but no snowstorm has occurred yet to cause the roof to fall in, you are on your own to undo your faulty construction and re-build it correctly. If however the mistake wasn't realized until after the snowstorm pointed it out to you, then any damage to the building and even the roof (but not the section with the missing or wrong truss construction) would be covered. The principle is that insurance is meant to cover unforeseen events (such as the snowstorm); it is not meant to reimburse for stupidity or carelessness.

TigerFan

Just had this brought up to me by an asset management company I do work for.

I "discussed" it with them for about 30 minutes - what an assinine thing. E&O does not even apply to our line of work.

I think some higher up at some big REO company thought - hey, we require all our title companies to have this insurance, let's have all our construction companies have it too.

I'm getting ready to demolish a home for them.

First they had me turn in a bid to repair the home - a car had crashed into it. I bid $14k.

They came back and said, we want a bid to demolish the house. I bid $10k.

They gave me a WO to demolish.

So, this coverage will protect me, when, 6 months from now, some a-hole decides it was an ERROR to demolish the home eh? lol

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http://www.bayoucontracting.com

AboveAndBeyond

off-topic but speaking of a home-demolishing error: http://www.wsbtv.com/news/19715994/detail.html

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Above & Beyond Remodeling LLC - http://www.aboveandbeyondct.com

72chevy4x4

what is the difference between the umbrella and E&O policy?

XanadooLTD

Sort of. The reason though that you do need E&O was stated before in the post. Not only are you doing cleanouts, but you are expected to give a condition report every time you go to the property. If you go to the property and the roof has blown off and you don't report it. A month goes by, someone else goes to the property and sees it. It is your butt that is getting sued. E&O is exactly that. Also YES it is required. If you call around to get this insurance it is the same insurance that title companies have. And yes it is an extra 2300 bucks. Good luck, but it is there to save your behind. I have also heard that alarm guys are now being required to have this additional insurance. Looks like it will be coming in the future to everyone.

ScipioAfricanus

My E&O insurance guy tells me that I need to have the policy in place basically forever after I do the design & drafting work. It is not like my liability ins. how I am covered as I do the job then if I drop it after wards at sometime I am still covered for the work I did.
If I do not have the E & O policy in effect say years after the job is completed I will not be covered if I am sued.

Andy.

RidgeWalker

I have to agree that you don't need E&O insurance to perform the services you list on your web site.

Even if you did a property inspection your not providing any type of inspection that would require a license. Are you?

Seems to me that the REO business's need to learn what who "really" needs to have E&O insurance.

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Restore My Home Construction
Atlanta Roofing Repair
My SN Profile

Astrix

Commercial General Liability insurance is usually written on what is called "per occurrence" basis. This means that the policy has to be in force at the time the claim occurred. Even if the person who sues you waits two years, and maybe you had cancelled that policy more than a year ago; the insurance company will still defend you and honour any claims settlement.

Errors & Omissions Liability insurance, however, is usually written on what is called "per claim" basis. So in the same scenario, if the claim happened two years ago that doesn't matter. You have to have a policy in force at the time the law suit is served and the claim is made.

So your insurance guy is correct in stating that you have to continue with the E&O insurance even if you retire and aren't working anymore because you still need to protect yourself from the possibility of claims that haven't been served yet. As for stating that you need to do this "forever", that is a bit dramatic. Civil lawsuits all have statute of limitations and suits have to be served anywhere from 2 to 7 years depending on where you live and what the suit is claiming. Once the statute of limitations expires, then you can safely cancel your E&O insurance without having to worry about the possibility of long-ago incidents popping up as a newly served lawsuit.

Astrix

Umbrella Liability insurance is like a 2nd layer over top of all your other liability insurance policies. So, for example, let's say you have auto insurance with a $1,000,000 limit. Then you have general liability insurance with a $1,000,000 limit. Instead of having both of those policies amended so that the limits are increased to $5,000,000 each; instead you can buy an Umbrella Liability Policy for $4,000,000.

Why do this? Essentially, it is the same coverage, however, because of the way insurance is priced and underwrittern, it is usually cheaper to buy the umbrella policy than it is to increase your primary limits. Also, the umbrella policy has some extra little features that makes for a good exam question if you are writing your insurance broker's license, but most regular people don't care so I won't bother explaining that part.