Most companies consider policy checking a low-risk activity as a training ground for junior associates. Moreover, policy checks should be prioritized, and backlogs are regular. This is a recipe for disaster and an errors and omissions (E&O) liability claim.
E&O Liability Claim
E&O claims refer to claims made against individuals or businesses for errors or omissions in performing their duties. These claims may result from mistakes, oversights, or failure to perform with the expected level of care, skill, and diligence. E&O claims can arise in a variety of professions.
For example, an E&O claim against an accountant may result from financial statements or tax return errors. At the same time, an E&O claim against a real estate agent may result from oversights in property transactions.
E&O claims can result in significant financial losses for individuals and businesses. It can also include the cost of defending against the claim, paying settlements or judgments, hiring experts, or conducting investigations. And that’s why it’s essential for professionals who provide services to have errors and omissions (E&O) liability insurance in place. And it should provide coverage for defending against and paying settlements or judgments for E&O claims.
Errors And Omissions Liability Insurance
E&O liability insurance coverage protects businesses and individuals from financial losses resulting from mistakes or oversights in their professional duties. This type of insurance is also known as professional liability or malpractice insurance.
According to Investopedia,
“Errors and omissions insurance protects companies against the full costs of a claim made by a client against a professional who provides advice or service, such as a consultant, financial advisor, insurance agent, or lawyer. Common business insurance protects an entity should someone accuse that company of making a mistake.”
Examples of professions that may need errors and omissions liability insurance include:
Accountants: To protect against errors in financial statements or tax returns
Architects and engineers: To protect against errors or omissions in design and construction plans
Lawyers: To protect against mistakes or oversights in legal advice or representation
Real estate agents: To protect against errors or oversights in property transactions
Technology professionals: To protect against errors or oversights in software development or technology consulting services
Policy Checking and The Steps Involved
Insurance policy checking is verifying the details of an insurance policy to ensure that it accurately reflects the coverage and terms agreed upon by the policyholder and the insurance company. It is a great way to ensure you mitigate errors and omissions since you’ll catch them before anyone else.
The steps involved in insurance policy checking are:
Reviewing the policy document
The first step in policy checking. And it outlines the insurance coverage terms, conditions, and benefits. This document should be carefully read to reflect the requested and agreed-upon coverage.
Verifying policy details
The next step is to verify the policy details, such as the policyholder’s name, address, and contact information, as well as the coverage limits, deductibles, and premium amounts. This information should be accurate to ensure that the policyholder can receive the full benefits of the coverage.
Checking for exclusions
It is essential to check for exclusions in the policy. These are events or circumstances that are not covered by the policy. For example, some policies may exclude coverage for certain pre-existing conditions or types of losses or damage.
Reviewing the coverage limits
You should also review the coverage limits, which specify the maximum amount the insurance company will pay for a claim. It is essential to ensure that these limits are adequate for your needs.
Review the premium and payment terms
You should review the premium and payment terms to ensure that the policy is affordable and that payments can be made on time.
If you have any questions or concerns about the coverage, ask the insurance company for clarification. This will help ensure that the policyholder fully understands the terms and conditions of the coverage.
Update the policy
If necessary, you should update the policy to reflect any changes in your circumstances. It can include circumstances such as a change in address or adding a new family member. This will ensure that the policy remains effective and that you receive the full coverage benefits.
Problems Associated with Policy Checking
Although straightforward, policy checking can be cumbersome and error-prone if not done correctly. Some problems associated with policy checking are listed below.
It Is Time-Consuming
Reviewing an insurance policy can be time-consuming, especially for those who need to become more familiar with insurance jargon and terms. Policyholders may need to take the time to understand the details of their coverage and ask questions if they need clarification.
The Complex Language and Policy Types
Insurance policies can be written in complex language, making them difficult for the average person to understand. This can lead to confusion and misunderstandings about the coverage, which can result in the policyholder needing to be more adequately protected in the event of a loss.
Limited Access to Information
Policyholders may have limited access to information about their coverage, especially if they have an older policy or have not reviewed it in a while. This can make it difficult for them to accurately assess their coverage and make informed decisions about their insurance.
Reliance On the Insurance Company
Policyholders often rely on the insurance company to provide accurate information about their coverage. However, the insurance company may only sometimes provide complete and accurate information, which can result in misunderstandings and incorrect coverage decisions.
Lack Of Follow-Up
Policyholders may need to remember to follow up on the policy-checking process or may not prioritize it, resulting in outdated coverage or not meeting their needs.
Outsourcing Policy Checking
It is possible to outsource plenty of administrative tasks. And if you’re wondering, it is possible to outsource policy checking for your organization’s benefit. You’ll find a list of benefits of outsourcing it below.
It is common wisdom that outsourcing can save time. It can also improve the policy’s accuracy and completeness, as the insurance checking service will have the expertise and resources to thoroughly review the policy and identify any errors or omissions.
Access To Domain Experts
Outsourcing can provide access to policy-checking experts who know everything there is to learn about insurance policies. And they will be familiar with the complexities of insurance policies and can provide you with a comprehensive and accurate assessment of their coverage.
You may be biased or unfamiliar with insurance terms and concepts, leading to misunderstandings and incorrect coverage decisions. But insurance policy checking services can provide an objective and unbiased assessment of your insurance policy.
Outsourcing insurance policy checking can be cost-effective, as you do not need to hire additional staff or dedicate your time and resources to reviewing your policy. The insurance policy checking service will provide policyholders with a comprehensive assessment of their policy, which can help them make informed decisions about their insurance coverage.
Learn more about insurance policy administration process flow and insurance policy checking software before you explore outsourcing. Outsourcing your policy checking services to a professional insurance checking service can provide you with all the benefits and none of the shortcomings of the process.