ERRORS & OMISSIONS LIABILITY INSURANCE TO PROTECT AGAINST INTENTIONAL ACTS, ERRORS & OMISSIONS

Real errors and omissions (E&O) liability insurance provides protection against negligent acts, errors or omissions regardless of the cause (accidental or intentional) and regardless of the result (bodily injury, property damage or financial loss). The best way to demonstrate the importance of this coverage is to describe two claims involving one investigation agency and a security guard company. We hope these examples will prompt you to carefully scrutinize your errors and omission coverage to make sure it's the real thing.

Example #1

A security company was hired to provide security at a large office building in a major city. During the contract period, numerous tenants cancelled or did not renew their leases, alleging poor security in and around the building. The building owner sued the security company for $5 million for the loss of rental income and for damage to the buildings reputation. . . Most commercial general liability policies would not cover this claim because it resulted in financial loss, not bodily injury or property damage. The claim would, however, fall within a properly worded errors and omissions endorsement.

Example #2

A group of investors hired an investigative agency to check out a developer they were thinking of investing with. The investigative agency gave the developer a clean bill of health. The investors invested $10 million in the developer's project. The project failed. The investors hired another investigative agency to find out what happened. The second agency uncovered that the developer had a poor credit history, numerous liens filed against him and a history of failed projects. The investors sued the first investigative agency for having performed an incomplete and inaccurate investigation and for having issued an incorrect report.. . Most commercial general liability policies would not cover this claim because it resulted in financial loss and not bodily injury or property damage. The claim would be covered, however, under a properly worded errors and omissions endorsement.

Blair Brownyard is the EVP of Brownyard MacLean Specialty Insurance, LLC. Blair has been actively involved in insurance solutions and claims reviews for the private security industry since attending Touro Law School in 2001. He graduated with a J.D. in 2004 and was actively involved with Brownyard Programs, Ltd. with his father, Bruce Brownyard since 2011.

This information contained herein is provided for information purposes only and is not intended to be a representation of coverage that may exist in any particular situation under a policy issued by one of our companies. All conditions of coverage, terms, and limitations are defined and provided for in the policy. This information is intended for use as a guideline and is not intended as, nor does it constitute, legal or professional advice. In no event will Brownyard MacLean Specialty Insurance or any of its affiliates be liable in any manner to anyone who has access to or uses this information.