Before learning what any type of insurance does not cover, one must understand its definition and what kind of protection it offers. An Errors & Omissions insurance (E&O) policy is primarily meant for businesses within the professional services sector (or for those that offer professional advice) to protect the business when an employee makes a mistake.
There are a few primary categories of E&O claims: professional negligence, retroactive claims and subcontractor errors. The actual costs that are paid by the insurance company when a claim is approved often relate to judgments, legal defense, and settlements.
An E&O policy will not provide coverage for a variety of scenarios, such as intentional wrongdoing or harm, illegal activities, employee injuries or lawsuits, and business property damage.
Deceiving customers on purpose prevents you from being covered in the case of a claim. For example, a boutique that sells clothes by saying they pertain to a particular brand when in fact they are fake, would not be covered by an E&O policy.
Let’s say you sell very expensive vases. You pay someone to “accidentally” break a vase, and then you file a claim to recover the money. A claim is denied if the company tries to scam the insurer or does anything else illegal.
If there is ice in front of your store and someone breaks his arm by slipping on it, E&O would not cover the suit; this type of situation falls under general liability coverage.
If an employee gets injured on the job, E&O won’t cover it. This falls within the scope of workers compensation insurance, which is mandatory in most states for businesses of a certain size. Still, it is a good idea to consider a workers compensation policy even if you are not required to do so by law in your state because you could otherwise be left unprotected.
If you were accused of having discriminated against a job candidate based on criteria such as gender or race, E&O would not cover any lawsuits that follow. To protect your business against such a case, employment practices liability insurance would be the appropriate coverage.
If a flood ruins the merchandise in your shop, there is no reason to file an E&O claim because it does not cover this sort of situation. You would want to have commercial property coverage, or a business owners policy, to protect your shop against damages due to fire, storms, and theft.