Breaking Down the Most Common Causes of E&O Claims

Errors and omissions coverage—also known as E&O insurance—is essential for any business that offers professional services to others. Without it, a company is left with dire exposures that can be highly detrimental to a business.

Often required by clients, this coverage helps with a multitude of situations. It’s versatile and changing as technology rolls along. No one wants to be accused of negligence; not having coverage in this case often means that your court case dues are going to come directly out of your pocket.

In the case of a small business, this could be fatal for a business. Every claim that can be filed differs. As a business owner, knowing what kind of E&O claims that can arise is crucial. It can mean the difference between your business sinking or floating.

This is a break down of the most common causes of E&O insurance claims, courtesy of the National Ethics Association.

Inadequate Communication and Documentation

With this modern age of texting and email, miscommunication can happen pretty often. All businesses should always strive to keep their employees or clients in the know. Don’t assume that they know what’s going on if you haven’t said anything, and don’t count on them to read between the lines of what you do tell them. Always give those a surplus of information, documented via email or some other form of paper trail. Keep copies of documentation that your employee or client is also in possession of.


Beefing up your qualifications is not only unethical, but it can be really problematic if you  are caught. This is why it’s always best to be honest and upfront from the beginning. Misrepresentation can also happen if you fail to properly disclose on a company policy or even if you make a mistake on an insurance application.

Inadequate Coverage

An E&O insurance claim can also arise from failing to address financial key needs or providing policies with limits that simply aren’t enough. This is why being thorough is key. Always do a full needs analysis, recommend products for the problems discussed and have a waiver signed if your clients don’t want what they’ve been offered.

Breach of Duty

No matter what industry you work in, it is always your duty to ensure that your clients receive the goods and service that they have paid for and been promised. When your business fails to do this, it’s called a breach of duty. When your client is suffering, you’re also suffering. Another way breach of duty can transpire is if a client isn’t told that they can’t be covered in a timely manner.

It’s not just about having knowledge and skill. It’s also about thinking about what makes sense and what doesn’t. Then it comes down to how you interpret for it. For most professionals working with money, having this kind of coverage isn’t up for debate.


About Transparity Insurance Services

Transparity Insurance Services was founded for the purpose of helping clients to ensure their property and assets with no hassle. We are committed to providing a simple, easy, efficient, and positive experience to all of our clients, and prioritize open and transparent communication with our clients. Through our excellent customer service and technology, we can help you to find the right insurance program at a competitive price. Contact us today at (855) 889-2037 to learn more about what we can do for you.