What Information Will I Need When Applying For Professional Liability (E+O) Insurance?

Professional liability insurance, commonly known as errors and omissions (E&O) insurance, is important coverage for businesses offering services to clients. To obtain E&O coverage, you’ll need to complete an E&O application and provide additional information that underwriters use to evaluate your business from a risk perspective. To make the insurance buying process quick and easy, try to have all the documentation described below on hand when applying.

Information to Have Handy When Filling Out an E&O Application

Revenue

When you apply for E&O, carriers will want to know some financial background about your business. When approaching an insurance broker, make sure to have at least the past two years revenues and the projected revenues for the coming year. If you’re a new business, an estimate of revenue over the next 12 months will suffice.

Resumes of Principals or Key Employees of the Firm

Underwriters want to know that your key personnel have experience in the field in which they’re actively working as well as whether they have management experience. Usually, having at least five years in the industry and experience running a team at a prior company will suffice. An organizational chart can also be good documentation to share with insurance carriers

Sample Client Contract

Underwriters like to review the contract template you use with your clients. They like to see “indemnification” and “hold harmless” wording in your favor. They don’t like to see performance guarantees that can be used against you, such as, “If you use our services, we guarantee your revenue will increase 15% in the first year or your money back.” Insurance carriers don’t like to gamble when it comes to professional liability coverages.

Contract

If you’re purchasing the insurance to comply with a client’s contract, you should have that contract (or at least the “insurance” section) available to forward to your insurance broker. This document provides important details on how your E&O insurance should be structured. This will also give the insurance company the opportunity to view the “hold harmless” and “indemnification” language within the contract.

In Summary

When looking to purchase E&O insurance, it’s a good strategy to have your ducks in a row when it comes to collecting and storing the data that insurance carriers will need to evaluate your business. Feel free to use this article as a checklist when looking to obtain E&O insurance for your business. Proactive preparation will help you save time and energy when shopping for E&O insurance to cover your business’s activities.