How to make an errors and omissions claim

An errors and omissions insurance policy can cover lawyer's fees, judgments, settlements, and court costs when professional mistakes or oversights lead to legal trouble. However, you'll need to stay on top of the claims process to resolve a dispute without a significant impact to your business. These five steps can make the filing process easier.

If you think you’ll have to file a claim on your policy, review your E&O certificate of liability insurance and write down as many details about the possible claim as you can remember. Your insurance provider will need to know:

• Your name
• Business name
• Current contact information
• Policy number and type of coverage
• A description of the claim
• When you first learned about the incident

It’s important to be as fast and thorough as you can with this information. The terms of your coverage could be affected if you don't report an incident as soon as you learn of it. Generally, it’s also a good idea to set aside funds for your policy’s deductible in case you do have to file a claim.

Calling your insurance agent should be the next item on your to-do list. Whether you learn of a mistake that your company made or you're named in a lawsuit, contact your agent right away. Often, the agent will recommend that you call your insurance carrier even if you haven’t been sued yet. Early notice allows the insurance company to quickly investigate and resolve a claim.

Also be aware of the statute of limitations in your state. An incident that you forget about after a week could result in lawsuit years later, so it’s important to keep your insurance agent informed.

The insurance provider representative who handles your case should be able to answer questions about the claim. This will be a different person than your agent, but both will be good resources during the filing process. You may want to ask your representative:

• What does the policy cover?
• Are there time constraints for filing the claim?
• Is this particular incident covered?
• What are my options if this becomes a lawsuit?
• How can I get in touch with the agent assigned to my claim?
• When can I expect a follow-up?

If you are sued, documentation will be your best bet for a successful legal defense. As a rule, you should keep detailed records of your professional activities and actions, especially when interacting with clients.

If you have contact with the person suing your business, document any form of communication, such as:

• Phone calls
• Emails
• Face-to-face discussions

Be sure to document communication you have with your insurer, too. Get conversations in writing, note dates and times of discussions, and keep copies of anything you send to your provider. A good documentation policy is crucial for limiting your professional liabilities.

Is the lawsuit inevitable? When you’re facing a court case, your insurance carrier may recommend that you pursue one of these options:

Answer the claim. You will go to court, admit to or deny the allegations, and provide evidence for your defense, if necessary.

Attempt to dismiss the claim. If the plaintiff doesn’t have legal standing to file the lawsuit or presents a weak case, your lawyer can try to have the claim dismissed.

Settle the claim. Because the litigation process is very expensive, your insurer may recommend you reach a monetary settlement out of court with the plaintiff, as it may be cheaper than the alternative.

Be sure to understand what each option means, and if you have any questions about your insurance policy, don’t hesitate to talk to your insurance agent.

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