E&O: Protecting Against Everyday Exposure

business operations

One insurance pro explains why associations may want to consider an errors and omissions, or professional liability, insurance policy.

Associations offering content, education, certification, and a host of other services to members inevitably face risk. Tim Covello, executive vice president, professional liability, at AXIS PRO, explains how an errors and omission (E&O) insurance policy can help limit the exposure associations face in their day-to-day operations.

What coverage in a broad-form, or beyond- the-basics, E&O policy might an association find valuable?

This policy could cover standard setting, accreditation of products and services, content—everything from posting information on a website to hosting a chat room—and network security and data privacy, just to name a few.

Most associations carry several types of insurance. Why do they need an E&O policy?

Someone might have a general liability policy and a directors and officers (D&O) policy, but an E&O policy covers exposures an association clearly has but probably doesn't think about all the time.

In what area do you see the most claims?

Standard-setting and certification activities, such as alleged improper certification of a product that results in the insured's loss of a client's contract. For example, let's say someone manufactures 10,000 widgets that were certified by an association to meet a certain standard promulgated by the association, and then there's a problem with the widget somewhere along the line. Now the client or its customer loses the value of the 10,000 widgets that don't do what they're supposed to do. The association is sued because of its certification. This policy covers that liability exposure.

What types of network security and data privacy exposures could be covered?

A lot of associations are collecting private, personal data from members. The association would have liability exposure if that information ever gets lost or stolen, whether it's on a laptop, on a server somewhere, or on a thumb drive.

[This article was originally published in the Associations Now print edition, titled "Cover Up."]