Trade and engineering associations play an irreplaceable role in setting standards, providing education to members, and advocating on behalf of participants in ways they cannot achieve alone. To support this effort, associations are wise to carry insurance that shields both management and members. Errors & omissions (E&O) insurance for trade associations is one of the most effective ways to address liability exposure. Still, many associations find the hard way that their insurance does not cover what they thought it would.
To get the most out of your trade association insurance for errors & omissions, it is essential to examine the entire package carefully. That includes identifying coverage gaps and working with industry professionals to add protection where necessary. The following is a guide on common E&O coverage gaps to get you started.
Essential Takeaways
- Errors & omissions insurance addresses claims of negligence or other errors from engineering association members.
- Many associations either choose insufficient E&O coverage or none at all, believing general liability is enough.
- E&O coverage gaps for engineering associations commonly include services that have expanded over time, credentialing, and limits that are too low.
- Coverage gaps can be identified by carefully reading the policy, running hypothetical scenarios, and seeking professional help.
Understanding E&O Coverage
Before you can jump into the nuances of your E&O policy, you must understand what E&O is and its role in trade associations. E&O, or errors & omissions, is a type of insurance protection that covers claims arising from negligence, errors, or failures in the course of performing professional services. That is why it is sometimes called professional liability insurance.
For engineering associations specifically, E&O insurance claims often arise from advisory services, education and training programs, certifications, and other activities. While general liability insurance focuses on physical injuries to third parties or their property, E&O addresses the financial losses those parties might suffer when a professional makes a mistake or misrepresents a professional service.
The Most Common E&O Coverage Gaps for Engineering Associations
There are two main reasons engineering associations often fail on the E&O coverage front: they believe their E&O coverage protects them against things it does not, or they think general liability insurance is sufficient. Some of the most common areas where associations remain mismatched with their coverage include:
Service Definitions
Depending on when the association acquired the policy and the services it typically performs, covered activities may no longer fall within its scope of coverage. For instance, if the association expands to offer new services, such as certification programs it did not previously offer, these services might fall outside the policy’s original scope.
Credentialing
Not all E&O policies are the same. Many will explicitly exclude credentialing activities because they constitute a higher-than-average risk for the insurer.
Inadequate Limits
Specifically in engineering, claims can carry substantial financial consequences. If the E&O insurance policy limit is insufficient, the association could still experience a costly surprise, even if coverage kicks in.
These are just a few of the possible areas in which engineering associations often find, often too late, that their coverage was not what they expected.
How to Identify Coverage Gaps in E&O
To keep your organization on top of potential financial consequences from errors and liability issues, regularly reviewing your insurance coverage is a smart move. However, you may be confused about where to start looking.
The Policy Itself
The best place to begin your exploration into E&O insurance is to read the policy you currently have. See if anything stands out as notably missing. This is also a valuable opportunity to spot coverages that you do not need but are paying for.
Run Claims Scenarios
Based on your existing membership and activities, simulate some reasonable, realistic claims. Perhaps a member relies on outdated published guidance, or a third party alleges financial harm. Assess whether the policy responds as you intend.
Work With Professionals
Sometimes, it is impossible to know what you do not know. By teaming up with professionals who work with insurance coverage for engineering associations, you can get customized guidance about risks you may not anticipate and the particular challenges your association should prepare for.
Get the Protection You Need From Professionals You Can Trust
Engineering associations that want to benefit from strong financial protection should include errors & omissions insurance as part of their overall coverage package. However, understanding whether your coverage is sufficient can be challenging. The professionals at CI Solutions collaborate with engineering and trade associations to create customized insurance products that address your specific needs. Contact CI Solutions to gain a partner dedicated to your success!