77. My HOA Board says we don’t need E&O insurance, what is that exactly?

E&O insurance is Errors & Omissions which is often misunderstood. It may include a claims-made form.

E&O is a type of liability insurance that helps protect professional advice and service-providing individuals and companies from bearing the full cost of defending against a negligence claim made by a client, and damages awarded in such a civil lawsuit.

EXAMPLES: causes that involve E&O Insurance:

  • Your HOA website makes a particular statement or promise that is misleading or in some way causes a visitor to make a poor choice or decision.
  • Your HOA contractor fails to execute an order in a timely manner and a substantial loss results (this could be the project itself or the cost).
  • Your HOA contracts with an accountant to handle the finances of your HOA and that accountant makes a mistake on a tax return, resulting in a financial penalty.

TIP: be sure your insurance agent provides exactly what your insurance covers and does not cover. Do not assume all liability insurance includes E&O coverage. It’s the “does not covers” list where you miss important benefits to your HOA that you may not clearly understand. Most important are the clarifications of:

  • the actual dollar figure for coverage
  • occurrence
  • retroactive date
  • discovery period
  • limited discovery period, and
  • long term viability of coverage