The cost of errors and omissions insurance can seem arbitrary to many professionals, which can make budgeting for this coverage feel challenging. Accurately predicting errors and omissions insurance cost can be difficult, since many factors affect the final price. However, most insured professionals can benefit from understanding three of the variables that frequently influence policy pricing.
Industry or Specialty
Professionals in certain industries or subdisciplines face a higher risk of expensive claims due to the nature of their work. For instance, lawyers, financial advisors, engineers and architects all provide high-value goods or services, which means they are more likely to face costly claims.
A professional’s history of past claims can also affect errors and omissions insurance cost. Even claims that were eventually dropped can affect policy pricing, since these claims may suggest poor practices that could result in similar claims and costly defense expenses in the future.
A professional may qualify for lower pricing by taking tangible steps to reduce the risk of harmful mistakes or oversights. For instance, pursuing training or continuing education on industry best practices is a step that could reasonably be expected to prevent future claims.
Balancing Costs and Gain
Evaluating these factors should help professionals better understand their likely errors and omissions insurance cost. Still, speaking with an insurance agent is often the best to understand insurance policy expenses. An agent may also be able to offer advice on potential ways of reducing these costs without creating unnecessary exposure.