Errors and omissions policies are not just the purview of themega-brokers.

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When small agents review their lists of clients, they canrecognize many insured business owners and consultants that shouldhave miscellaneous professional liability coverage, also known asmiscellaneous errors and omissions or E&O coverage.

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Visualize this risk, for example.

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A cement contractor was pouring a slab of concrete, whichincluded the piping for all the plumbing for a multi-unit motel.The concrete was poured about one foot off of the target. Thecontractor had to dig up the slab and pour the concreteagain.

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Luckily, the contractor's agent convinced the contractor to adda miscellaneous E&O coverage endorsement to his generalliability contractor's policy. Therefore, the fix was covered.

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Without the added miscellaneous E&O, coverage, thecontractor would have been responsible for paying for the repairssince a general liability policy excludes coverage for your ownwork product.

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The insured had to pay a slightly higher premium for the extracoverage, but the coverage paid for itself when the work had to beredone.

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AGENTS GET ON BOARD

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Agents who do not sell E&O coverage are missing theboat.

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Every agent knows that carrying insurance agents E&O isnecessary to be in business. How many buy E&O because theircarriers require it, or do they understand the valuable protectiontheir E&O policy provides?

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Today, Americans are suing first and asking questions later. Theburden of proof rests on the shoulders of self-employed businessowners and consultants when it comes to these lawsuits, which iswhy it is so important to have the right insurance coverage.

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Many professionals, however, particularly those who are new toconsulting, may be unfamiliar with the need to have properprofessional liability coverage.

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Today, modern business practices, technology advancements andeconomic factors have broadened the need for professionalliability. Many professionals, operating as independent contractorsor consultants have joined the job force and have risk exposure.These consultants are generally employed for a short period of timeto work on a specific project that requires highly specializedskills.

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This new crop of consultants includes Internet designers andprogrammers, data analysts, title abstractors (individuals whoresearch real estate titles), independent mortgage brokers andfinancial planners.

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For this group, there are many and varied exposures fromprofessional acts, which could give rise to possible claims. Theseexposures include, but are not limited to:

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o Incorrect Web site content (Web designer exposure)

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o Incorrectly programmed Web site that results in damage to theowner (programmer exposure)

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o Errors made in home title search (title abstractorexposure)

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o Giving bad or incorrect financial advice (financial consultantexposure)

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o Not disclosing all information associated with a home loan(mortgage broker)

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To successfully sell these products, agents need to spend timelearning the coverages that are available which are extensive. Togain assistance in education for professional products, there aremany resources, including members of the Minneapolis-basedProfessional Liability Underwriter Society, persons holding theRegistered Professional Liability Underwriter (RPLU) designationand, of course, local insurance associations and carriers.

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Presently, the professional liability marketplace is a highlycompetitive and creative segment of the insurance industry.

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The standard market is tapping into the miscellaneous E&Omarket, and in some cases offering lower premiums for this coverageto unsuspecting professionals.

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Agents need to be sure to educate insureds on their exposures,coverage details and risks when reducing coverage. If not, agentsput themselves at risk for a professional liability claim as well.Agents should not fall into the trap of accepting the “cheapest isbest” coverage, but rather look for the broadest form of coverageto meet the needs of their insureds.

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Placing professional coverage can be very rewarding andinteresting, as many insureds needing the coverage are presentlygoing without it.

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It is a definite sales opportunity which will demonstrate anagent's professionalism and in many cases can save the agent fromE&O claim of their own.

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David Price is executive vice president andchief underwriter officer at Burns & Wilcox in FarmingtonHills, Mich. He may be reached at [email protected]

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