Hazardous Materials: E&O Insurance Coverage

Errors and Omissions (E&O) Insurance, also known as professional liability insurance, protects businesses and professionals from claims made by clients for inadequate work or negligent actions. This includes claims of financial loss, damaged reputations, negligence, malpractice, errors, or omissions made while providing a service.

E&O insurance covers the legal costs associated with defending a business against a customer's claim, including lawyer fees, court and administrative costs, and, in some cases, any settlements or damages owed to the client.

While E&O insurance is not legally required for all businesses, it is essential for businesses that provide services or advice, such as real estate agents, doctors, lawyers, and financial advisors. Without E&O insurance, businesses could face significant financial burden and risk in the event of a lawsuit.

Bodily injury or property damage

Errors and Omissions (E&O) insurance is a type of liability insurance that covers claims against your business for mistakes, negligence, malpractice, or services you failed to provide. It does not cover claims for bodily injury or property damage—these fall under general liability insurance.

Bodily Injury

In the context of car insurance, bodily injury liability coverage helps pay for another person's expenses if you injure them in a car accident. This includes hospital fees, emergency care, follow-up visits, equipment costs, lost income, pain and suffering, and funeral costs. Most states require bodily injury liability coverage, and the cost varies based on the driver and how much coverage they purchase.

Property Damage

Property damage liability coverage, on the other hand, pays for damage to other people's property if you are found to be at fault. This can include compensation for vehicle damage and damage to other property, such as items in the vehicle or surrounding property. Like bodily injury liability coverage, most states require property damage liability coverage as well.

Workplace injuries

Errors and Omissions (E&O) insurance is a type of liability insurance that covers claims against your business for mistakes, negligence, malpractice, or services you failed to provide. It does not cover workplace injuries, bodily injury, property damage, data breaches, intellectual property violations, or criminal acts such as fraud.

• Carbon monoxide: An odorless, colorless, and tasteless gas that can cause sudden illness or death. Equipment failure is often the cause of carbon monoxide release in the workplace.
• Ammonia: A colorless gas that can cause irritation and severe burns to the skin, mouth, throat, lungs, and eyes. Equipment failure or human error can lead to ammonia release.
• Chlorine: A toxic gas that can irritate the nose, eyes, and throat and cause chest pain, coughing, and lung damage. Human error is a common cause of chlorine release.
• Hydrochloric acid: A clear and odorless substance that can harm respiratory organs, eyes, and skin. Human error is often the cause of hydrochloric acid release.
• Sulfuric acid: An oily, clear, and colorless liquid that can cause chemical and thermal burns, as well as blindness. Equipment error is a common cause of sulfuric acid release.

To prevent workplace injuries caused by hazardous materials, business leaders must prioritize employee safety. This includes proper storage, ventilation, and security of hazardous materials, as well as comprehensive communication and training on the risks and handling procedures associated with these substances. By being proactive in managing hazardous materials, businesses can lower the risk of accidents and create a safer work environment for their employees.

Data breaches

E&O insurance, also known as professional liability insurance, protects your business from claims by clients for negligence, mistakes, faulty advice, or failure to provide the promised results. However, standard E&O insurance does not cover data breaches.

To protect against data breaches, businesses can purchase cyber insurance, which covers costs related to data breaches and cyberattacks. Cyber insurance can be purchased as a standalone policy, added as a rider to general liability insurance, or bundled with E&O insurance in a package called technology errors and omissions insurance (tech E&O).

Tech E&O is specifically designed for IT and technology companies and includes both E&O insurance and cyber liability insurance. It covers providers of technology products or services when they are accused of negligence, mistakes, or oversights, as well as data breaches that affect their business or their client's operations.

First-party cyber liability insurance covers data breaches on the company's own systems, while third-party cyber liability insurance covers data breaches on clients' systems that the company worked on or is responsible for. For IT companies, third-party coverage is often included in E&O insurance policies, as they are primarily concerned with safeguarding client data.

The cost of tech E&O insurance depends on factors such as the level of risk in the profession, the chosen policy limits, the amount of personally identifiable information handled, the number of people who can access the data, and the company's claims history. For TechInsurance customers, the average cost is $61 per month or $735 per year.

Fraud or criminal acts

E&O insurance, also known as professional liability insurance, is a type of liability insurance that covers claims against businesses for mistakes made or services not provided. However, E&O insurance does not cover all types of claims.

One type of claim that E&O insurance does not cover is fraud or criminal acts. Fraud is a crime of deception for financial gain and is considered a "specific intent" crime, meaning that the suspect must have had the intent to defraud. In the context of insurance fraud, this could involve making false or misleading statements on a policy application or claim form, exaggerating a legitimate claim, lying about the cause of loss, or staging an accident or loss.

For example, an individual may lie on an insurance claim to qualify for reimbursement that they are not eligible to receive, or they may fake accidental property damage and file a false insurance claim. Insurance fraud can be committed by individuals from all walks of life, including doctors, lawyers, and people in positions of trust. It is also important to note that insurance fraud can be committed by people within the insurance industry itself, such as agents or adjusters.

The consequences of insurance fraud can be severe and may include fines, imprisonment, or both. Additionally, restitution may be ordered, and the perpetrator may have to pay back any money obtained fraudulently. Insurance fraud hurts not only the individual and the insurance company but also society as a whole, as it leads to increased insurance premiums for everyone.

Copyright infringement

Errors and Omissions (E&O) insurance is a type of liability insurance that covers claims against your business for mistakes, services you failed to provide, negligence, malpractice, errors, or omissions made while providing a professional service. E&O insurance is essential for businesses that provide a service, as it can save them from customer-initiated lawsuits.

E&O insurance covers the costs associated with defending your business against a customer's professional negligence claim. This includes lawyer fees, court and administrative costs, and claims for past services provided.

E&O insurance does not typically cover claims for property damage, bodily injury, workplace injuries, data breaches, intellectual property violations, or criminal acts such as fraud. However, copyright infringement is an exception, and E&O insurance can protect businesses in the media industry, such as publishers, advertising agencies, and online publications, from claims related to copyright infringement.

In the media industry, E&O insurance is often referred to as media liability insurance or media errors and omissions (E&O) insurance. It covers copyright infringement, as well as claims for defamation, invasion of privacy, and similar offenses. This type of insurance is crucial for media businesses as they could commit an advertising injury as part of their typical operations.

In addition to E&O insurance, businesses can also purchase commercial general liability (CGL) insurance, which covers "advertising injury" claims, including copyright infringement if an infringing image is used in the insured company's advertisements.

Therefore, if you are in the media industry and are concerned about potential copyright infringement claims, it is advisable to consider purchasing E&O insurance or CGL insurance to protect your business.

Frequently asked questions