Errors and Omissions Insurance Coverage Basics
Errors and omissions insurance coverage is designed to protect the policy holder that is in the business of making recommendations, giving advice, or providing other professional services to third parties. The policy is designed to provide protection against claims or lawsuits when they made an error in their occupation or when they made an omission by neglecting to do something which they should have done in the course of their business or profession. It is sometimes referred to more specifically as malpractice insurance, such in the case of insurance for doctors as medical malpractice or insurance for errors and omissions by lawyers commonly known as legal malpractice insurance.
One of the common clauses in such policies is a consent to settlement clause. Unlike a typical liability insurance policy where the insurer has a unilateral right to control the litigation and to settle a claim or lawsuit at their discretion, E & O policies typically have a consent to settle clause. Thus the insurer may not unilaterally settle the case without the insureds consent.
