Errors & Omissions Insurance for California Professionals.

Most E&O policies are claims-made — coverage applies when a claim is filed during the active policy period, regardless of when the underlying error occurred (subject to retroactive date provisions). This is different from GL, which is typically occurrence-based. Claims-made coverage requires careful management: if you let coverage lapse, claims arising from past work aren't covered when filed against you later. We coordinate renewals, retroactive dates, and tail coverage to prevent gaps.

The retroactive date is the earliest point from which work performed is covered under your current policy. Claims arising from work done before the retroactive date aren't covered, even if filed during your policy period. New E&O policies often default to inception date (no coverage for prior work), but careful structuring includes a meaningful retroactive date that extends back. We negotiate retroactive dates that cover real operating history where possible.

An extended reporting period extends the time after a policy ends during which claims can be filed and still covered. If you stop carrying E&O (selling the business, retiring, changing carriers improperly), claims filed afterward for past work aren't covered without a tail. Tails range from 1-6 years typically and cost 100-300% of annual premium. Critical at business transitions; we coordinate proactively when clients sell, retire, or change carriers.

E&O covers professional negligence — claims that your work fell below the standard of care for your profession. It doesn't cover guarantees of specific results, contractual disputes over scope, or claims that you didn't deliver what was promised when the work was actually completed. Coverage applies to errors, omissions, and breach of professional duty — not to general business disputes. We help clients understand the boundary between covered professional negligence and uncovered business disputes.

This is a critical distinction. 'Defense inside limits' means legal defense costs deplete your coverage — a $1M policy might be entirely consumed by defense before any settlement is paid. 'Defense outside limits' (sometimes called 'defense in addition') means defense costs don't reduce the limit available for settlement. Defense outside limits is significantly better for the insured and typically costs 10-20% more in premium. We always recommend defense outside limits where available.

Modern California E&O policies often include some cyber liability (data breach response, some privacy claims), but standalone cyber coverage is broader. Breach of contract claims are sometimes covered, sometimes excluded — it depends on the specific policy form. IP infringement (copyright, trademark, patent) is sometimes covered under E&O for some industries but is increasingly carved out for separate IP insurance. We review policy forms carefully and coordinate with standalone cyber and IP coverage where needed.

California has restrictions on insurance for punitive damages — public policy generally prohibits coverage of punitive damages awarded for the insured's own conduct. Most California E&O policies explicitly exclude punitive damages, while still covering the underlying compensatory damages and defense costs. Some policies offer 'punitive damages wrapper' coverage that uses foreign insurance carriers to provide coverage permitted by California law in specific circumstances.

When changing E&O carriers, the critical issue is what 'prior acts' coverage the new carrier provides. The new policy should have a retroactive date matching or earlier than your original coverage to maintain continuous coverage for old work. Without prior acts coverage, switching carriers creates a gap for claims arising from work performed before the new policy starts. We negotiate prior acts coverage carefully on every E&O renewal or carrier change.