Errors and Omissions (E&O) insurance protects consultants, architects, engineers, and financial advisors against malpractice and negligence allegations.
1. Defense Inside vs. Outside Limits
Crucial Policy Distinction
- Defense Inside Limits: Legal defense costs are deducted from the available policy limit, leaving less capital for settlements.
- Defense Outside Limits: Underwriters pay legal defense fees in addition to the full policy indemnity limit.
- Softened Hammer Clause: Limiting insured co-insurance penalties if a proposed settlement is rejected.