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Insurance IQ: General Liability vs. E&O Insurance

by Isaac Peck, Senior Broker at OREP.org

As a nationwide provider of liability insurance for private investigators (PIs), one question that I regularly hear from our current and prospective insureds is: What’s the difference between General Liability insurance and E&O insurance?

One investigator I spoke to a few months ago knew what general liability would cover, but questioned why a PI would even need coverage for E&O (errors and omissions). “What types of claims could a PI face where they would need to have E&O coverage, as opposed to just basic General Liability?” He queried.

Here’s a quick comparison of the two types of insurance.

General Liability Insurance: This is what most private investigators purchase and this coverage is actually required in a number of states. General liability (GL) covers you primarily for bodily injury and property damage (BIPD) claims. In other words, if it is alleged that someone got hurt or property was damaged because of your actions, then the GL policy covers you.

GL also typically covers ‘Personal and Advertising Injury,’ which includes coverage for libel, slander, and certain instances of invasion of privacy. It can also provide coverage for an insured’s tools and equipment, as well as property in the insured’s “care, custody, and control.”

GL is carried by most physical professions (security guards, contractors, electricians, etc.) as well as most retail shops (ex. Little Caesars, Walgreens, etc.)—being the core coverage that defends against the classic “slip and fall” lawsuits we see against retail establishments.

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Errors and Omissions (E&O) Insurance: E&O insurance, also known as professional liability insurance, covers you for mistakes—errors and omissions (E&O) that you make in your professional capacity as a private investigator. In other words, a mistake in the services provided. This type of insurance is very common for providers of professional services, including lawyers, doctors, real estate appraisers, architects, engineers, and so on.

So what are some scenarios where a private investigator would need Errors & Omissions coverage?

Here are two examples we’ve seen in recent lawsuits against investigators:

Preservation of Evidence: An accident investigation firm was hired to investigate an explosion on a drilling rig and a fire at a thrift store. In both cases, the PI firm “failed to preserve the evidence,” causing their clients to be found guilty of “spoilation of evidence” and severely prejudicing their client’s ability to defend themselves. The PI firm was subsequently sued.

Negligence: This is a broad claim and we’ve seen suits that range across the spectrum, including (A) overpromising the outcome of services, (B) failing to report important information in an investigation, (C) reporting incorrect information in an investigation, and/or (D) performing poorly in an investigation. If a poor, incomplete, or inaccurate investigation causes financial (or emotional) harm to a client or any stakeholder, the PI may have a liability exposure relating to their professional services, i.e. E&O insurance exposure.

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One Caveat: GL policies typically exclude any bodily injury, property damage, and personal injury claims that arise from professional services. This highlights the necessity for PIs to carry both GL and E&O coverages.

The good news is that most leading providers of investigator liability insurance (including OREP) are offering a single policy that has both of these key coverages built-in, removing the need for PIs to purchase two separate policies.

However, this is still something you need to be careful about. Many insurtech platforms, as well as brokers without sufficient experience servicing investigators, simply offer a basic General Liability policy to PIs—not understanding how this creates a significant liability exposure for you and your business.

If you ever have any questions about liability insurance or investigator risk management, or if you’d like a second set of eyes on your insurance policy, please contact us at OREP.org. Stay safe out there!

About the Author
Isaac Peck is the Publisher of Working PI magazine and the President and Senior Broker of OREP.org, a leading provider of E&O insurance for the PI industry. Working PI is the most widely read print magazine for investigators nationwide, reaching over 25,000 PIs. PIs who become OREP Members enjoy an 8-hour CE course at no charge. Reach Isaac by email at isaac@orep.org or call (888) 347-5273. CA License #4116465.

We’re always listening: Send your story submission/idea to the Editor: kendra@orep.org.

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