Errors and Omissions Insurance UK: What You Need to Know

Errors and omissions insurance in the UK is a type of professional liability insurance that protects businesses from claims of negligence or errors.

This insurance is particularly important for professionals who provide advice or services, such as solicitors, accountants, and architects.

In the UK, errors and omissions insurance is often a requirement for professionals to obtain a license or certification.

It's not a one-size-fits-all solution, as the cost and coverage of E&O insurance can vary significantly depending on the profession and business size.

Errors and omissions insurance is a type of professional liability coverage that protects your business from claims by clients for errors or mistakes.

It's designed to cover claims based on your failure to do the work, meet a deadline, or otherwise fulfill the terms of a contract. This can include faulty advice or a failure to provide the level of service your client expected.

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For example, if you're an IT consulting company and you provide inadequate advice on using new software, it can lead to machinery malfunctioning and lost business. Your E&O policy might pay for damages or settlements arising from those claims.

An E&O policy can also cover attorneys' fees, court costs, and other legal expenses your insurer incurs to defend your business against a lawsuit.

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Errors and omissions insurance in the UK covers damages caused by providing or failing to provide professional services. This includes monetary losses suffered by clients as a direct result of the services.

If you're a business that offers professional services, such as software development or website design, you're likely to need errors and omissions insurance. This type of insurance protects your company against claims by clients for negligence, mistakes, or faulty advice.

In the event of a lawsuit, your insurance can cover settlement and judgment charges, as well as attorney and court fees. It can also cover legal representation costs incurred towards investigation and defence of the claim.

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Some examples of claims that would be covered under an errors and omissions insurance policy include:

These types of claims can result in significant costs, but with errors and omissions insurance, you can be compensated for the expenses incurred.

Your Errors and Omissions insurance policy covers professionals, employees, partners, and the professional's company or partnership for damages caused by providing or failing to provide professional services.

Damages refer to a monetary loss suffered by the client as a direct result of the services provided.

Errors and Omissions insurance typically covers specific occupations, such as attorneys, accountants, or real estate agents.

Subcontractors are also covered, even if they're only engaged for a one-time project.

If a subcontractor commits a mistake or omission, associated claims will be covered under your insurance.

However, there are some exclusions to be aware of, including bodily injury or property damage.

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Employment-related acts, such as wrongful termination and discrimination, are also excluded.

Fraud or criminal acts, injuries to workers, infringement of patents or other intellectual property violations, data breaches, and theft of sensitive data are all excluded.

Your policy may contain additional exclusions, so it's essential to read it carefully and understand what's covered and what's not.

Here's a summary of the key points:

Errors and omissions insurance in the UK can be a complex topic, but understanding the policy and costs is crucial for businesses.

There is no simple answer to how much errors and omissions insurance will cost, as it depends on various factors such as claims history, number of employees, annual revenue, and industry experience.

Your claims history is a significant factor in determining the cost of your policy, so it's essential to provide accurate information to your insurance provider.

The number of employees you have also affects the cost of your policy, with larger businesses typically paying more.

Annual revenue is another critical factor, with businesses with higher revenue paying more for their policy.

Policy limits, including coverages and deductibles, will also be examined when pricing the policy.

Policies with higher deductibles usually charge lower premiums, so it's essential to weigh the cost against the level of protection you need.

Most errors and omissions policies are claims-made, meaning they only cover claims made against your business during the policy term.

Occurrence policies, on the other hand, cover claims arising from incidents that occur during the policy term, no matter when the claim is filed.

Occurrence policies provide broader coverage but are more expensive than claims-made policies.

When shopping for errors and omissions insurance, look for a policy that covers attorneys' fees and other legal expenses in addition to the policy limit.

Avoid policies that include these costs within the limit, as they can leave you with unexpected expenses.

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Choosing a policy for errors and omissions insurance in the UK can be a straightforward process. You can start by contacting your general liability insurer, as many offer E&O coverage.

Your business insurance agent can also help you get quotes or you can get quotes online yourself. This will give you a good idea of the cost of E&O insurance for your business.

The cost of E&O insurance varies by industry, with some businesses paying more than others. For example, a building design company may pay more than a hair salon or massage therapist.

If your company provides a professional service for a fee, you may want to consider Errors & Omissions Insurance. This type of insurance can help protect your business from financial losses due to mistakes or oversights.

If you have employees who complete contracted work, you'll likely need Errors & Omissions Insurance to cover their actions. This insurance can help mitigate the risk of errors or omissions made by your employees.

As a sole proprietor and operator of a service company, you're personally responsible for any mistakes made by your business. Errors & Omissions Insurance can provide an added layer of protection in this situation.

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If your business provides complex services, you may be more likely to make mistakes or encounter errors. Errors & Omissions Insurance can help cover the costs of these mistakes.

If you provide advice for a fee, you may be held liable for any mistakes or omissions in that advice. Errors & Omissions Insurance can help protect your business from these types of claims.

Some businesses may even require you to purchase Errors & Omissions Insurance as part of the contract. This is especially common in industries where errors or omissions can have serious consequences.

Here are some scenarios where Errors & Omissions Insurance may be necessary:

Small businesses should start thinking about raising their Errors & Omissions liability limit when their revenues or assets exceed £1 million.

A normal Errors & Omissions liability limit is £1,000,000 in coverage per claim, but larger businesses may require £5M or even £10M, which is rapidly becoming the industry standard for bigger Technology Errors and Omissions needs.

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You can start by checking if your general liability insurer offers E&O coverage, as many insurers that sell business insurance provide this.

Some insurers will add E&O coverage to a general liability or business owners’ policy via an endorsement, while others may not.

The cost of E&O insurance varies by industry, with a building design company likely paying more than a hair salon or massage therapist.

Many small businesses can buy an E&O policy for about $735 per year, but your premium will also depend on the size of your business and your claim history.

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Aon can help you navigate the complex world of insurance and risk management. They offer a range of services to support your business, including insurance broking, claims advocacy, and loss prevention.

Aon's insurance broking service tailors coverage to your business' specific needs, arranging insurance for all types of errors and omissions liability risk. This enables them to advocate for you in the claims process and work towards an optimal outcome.

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Their claims advocates have specialist experience to drive towards swift and fair resolutions, especially in complex cases. They can escalate claims to decision-makers and relevant stakeholders to ensure a fair resolution.

Aon's loss prevention specialists for law firms have years of experience in loss prevention, legal ethics, and professional liability law. They can help identify and minimize liability and professional responsibility risks.

Aon's actuaries work with firms to understand and satisfy their risk modeling and loss forecasting needs. They provide risk pricing and loss reserving in support of captive insurance financing.

Here are some of the services Aon offers:

By choosing Aon, you can benefit from their expertise and access to markets, enabling them to manuscript policies with broad policy terms and conditions. This gives you a cost-effective and efficient way to manage your insurance and risk needs.