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3 Tips for Receiving E & O Insurance Payouts Every Time

To smooth the claims process and maximize your odds of receiving E & O benefits in a timely manner, follow these three steps.

  1. Know what counts as a claim. Here's something that comes as a surprise to many IT business owners (and what causes some to have their claims denied): "claim" doesn't necessarily mean "lawsuit." In fact, many Errors & Omissions policies define a claim as any oral or written notification of an event that might lead to a lawsuit. That means you need to notify your insurance provider as soon as a client mentions that they're dissatisfied with your work, especially if they mention suffering a financial loss or contemplating legal action.
  2. Report claims quickly. Many E&O policies only offer coverage if you report a claim in the same policy period that it was filed. Here's what that means: Imagine that, at the end of 2013, a client emailed you insisting you breached contract by missing a deadline. Your policy covered 2013, and you've renewed it for another year. Months later, the client brings a lawsuit against you in early 2014. When you submit the claim to your insurance provider, it might not cover you unless you already submitted notification about the initial email. Why? Because some E&O policies work on a "claims made and reported" basis, meaning that coverage is only available to those who report claims immediately (i.e., within the same coverage period as they were introduced). Yes, this is fairly complicated. Be sure to ask your agent to clarify exactly what you need to do to receive E&O benefits from your policy.
  3. Update your policy as needed. Many insurance providers adjust their products (i.e., insurance policies) from year to year. And it's common for a small technology business to undergo fairly significant changes in the course of a year. Whenever you add new services, hire new employees, or otherwise change the way you do business, be sure to contact your agent to see if your E&O policy needs to be adjusted.


As an IT freelancer, independent contractor, or technology business owner, you're in an excellent position to help people improve their lives and their businesses by implementing the latest technological developments. To make sure your business also benefits from your expertise, it's essential to actively manage the risks that threaten your revenue. For IT professionals, risk management should include testing, client communication (including client education), contract use, and maintenance of business insurance.

70% of businesses raise prices or cut hiring when sued