No matter the size or industry of a business, it’s always important to have commercial insurance policies in place in order to cover finances during legal matters that may arise. While no one business owner wants to operate under the idea that something may go awry, sparking a legal battle, there still needs to be a standard coverage outline laid out to protect the integrity and future of a company.

The same goes for those who work in the public sphere and municipalities. From local government to schools to public transportation, public officials face a great deal of legal scrutiny within every civic project. Recently, a lawsuit in San Francisco was brought against the city’s Transbay Authority, suing them for more than $150 million for breach of contract. This is an opportunity for Errors and Omissions (E&O) insurance to step in and protect the entity and its employees.

Errors and Omissions for Public Officials

On the level, this kind of insurance is made to protect a business or municipality from claims of wrongful acts. But there needs to be an effort to understand the breadth of this coverage to best apply it. Also referred to as professional liability insurance, E&O is specifically designed to protect an entity—in this case, a public one—against allegations related to them failing to provide professional services.

It also provides a safety net for businesses who have been alleged to provide their services, but done so in a way that has caused major financial damage or other negative outcomes to a client. E&O covers a wide swath of a business, offering protection for any representative of an organization, compared to Directors and Officers insurance, another popular coverage option, that only covers executives within a company.

E&O is good to have because of its wide net it casts. It’s generally applicable to individuals who provide goods and services directly to clients. As in the story out of San Francisco listed above, the contractor took umbrage with the city transit authority’s design elements and execution of labor.

Look at Risk

Your public official clients should review their risks in relation to what they do individually and as part of a broader organization. From here, they can evaluate the best coverage options, but ideally an E&O policy is generally the best way to go.

Public officials in need of coverage should be encouraged to look at the industry they’re in as well as the size of the company and the general risk relative to its daily operations. From here, the insurance provider should finely detail everything from exposure to errors, omissions, misstatements, fraud or employee rights violations.

Also Covered Under E&O

If your clients need more direction when it comes to what can be covered by E&O, spell it out for them with the added bits of risks it blankets including:

• Financial damage to a client
• Design flaws (like in the Transbay Authority debacle in San Francisco)
• Malpractice
• Negligence

About Professional Governmental Underwriters, Inc.

Professional Governmental Underwriters, Inc., is a full-service risk management company dedicated to assisting public, educational and non-profit entities in the management of their professional liability exposures. We are dedicated to providing state-of-the-art professional underwriting management and loss control advisory services on behalf of our designated carriers. For more information, call us toll-free at (800) 586-6502.