At first glance, Errors & Omissions (E&O) policies can appear interchangeable. But according to Michael De Feo, Executive VP of Professional Lines insurance at Jencap, any surface-level similarities that exist create dangerous assumptions for retail agents.
“Two E&O policies can carry the exact same label and still respond completely differently in a claim,” De Feo explains. “That’s where agents either protect their clients—or unknowingly leave them exposed.” Sometimes just a few words can make a big difference. You may have thought vocabulary lessons were over at this stage in your life, but it’s time to study up on some important terms.
Why E&O Is Especially Vulnerable to Hidden Gaps
Unlike General Liability (GL), which responds to tangible events like bodily injury or property damage, E&O coverage depends on definitions, specifically related to how a policy defines professional services. That nuance matters because modern businesses rarely fit neatly into one role. Services expand. Revenue streams diversify. Responsibilities overlap. Coverage that matches your needs at policy inception rarely remains relevant without constant review.
“E&O doesn’t automatically evolve as a business grows,” says De Feo. “If the form language isn’t revisited, the policy can fall out of alignment very quickly.” This is where the illusion of equivalence takes hold. A client believes they have E&O coverage. An agent assumes the form is standard. Meanwhile, buried definitions and exclusions quietly change how the policy will respond (if at all).
The Most Common E&O Exclusions Agents Miss
Across industries, De Feo sees the same pressure points appear again and again.
Services Definition Mismatch
If a service isn’t explicitly listed, it often isn’t covered, even when it’s part of everyday operations. Budgeting, permitting support, investor reporting, and advisory functions are commonly assumed to be included when they’re not. “The number-one reason E&O claims go uncovered is a disconnect between how ‘professional services’ is defined and what the client actually does,” De Feo notes.
Missing Rectification Coverage
Without rectification coverage, errors caught mid-project may not be covered at all until they cause third-party damage. Design-only professional liability forms are especially prone to this gap.
Narrow Claim Definitions
Some policies only recognize a claim as a “demand for money.” That can exclude demands to redo, repair, or replace work, even when those demands carry real financial consequences.
Faulty Workmanship Language
Some forms exclude faulty workmanship outright. Others offer partial carve-backs. Understanding which version applies is critical in contracting, construction, and design-heavy professions.
GL vs. Professional Liability Gaps
Conducting an E&O coverage comparison is important. Remember, General Liability excludes professional services. Professional Liability excludes physical work. When policies aren’t coordinated, exposures can fall squarely between them. “Agents often assume one policy will pick up where the other leaves off,” says De Feo. “That’s not always how it works.”
Checklist: How Agents Can Pressure-Test E&O Coverage Before a Claim
Before binding or renewing an E&O policy, agents should go beyond just a coverage summary and walk through a form-level cross-check. Use this checklist for a thorough E&O coverage comparison:
- Does the definition of professional services fully reflect what the client actually does today, not just how they started?
- Are ancillary services (advisory, reporting, budgeting, capital-related activities) explicitly included?
- Does the policy include rectification coverage, and if so, how is it triggered?
- How does the form define a “claim”? Are non-monetary demands included?
- Is faulty workmanship excluded, carved back, or conditionally covered?
- How does this E&O policy coordinate with General Liability to avoid coverage voids?
- Has the client’s role expanded in ways that may require a different E&O form altogether?
This kind of review is where agents move beyond quoting and into true advisory territory.
Same Form Name, Different Outcomes: How E&O Shifts by Role
“E&O coverage” doesn’t mean the same thing across professions. A real estate broker’s E&O may exclude ownership interests or property management activities. A property manager’s form may carry absolute bodily injury or property damage exclusions that eliminate coverage for tenant-related claims tied to professional decisions. Contractors may carry design-only professional liability without realizing rectification is excluded. Developers raising capital often assume investor claims are covered, only to discover narrow carve-backs that fall short of true asset-manager protection. “The form name stays the same,” De Feo says. “The exposure does not.”
Frequently Asked Questions About E&O Exclusions
Why can two E&O policies with the same name perform differently?
Because coverage is driven by definitions, exclusions, and claim triggers—not the policy label. Small wording differences can dramatically change claim outcomes.
What is the most common E&O exclusion that agents overlook?
Misaligned professional services definitions. If an activity isn’t explicitly listed, it’s often not covered.
Is rectification coverage standard in E&O policies?
No. Many forms exclude it entirely or limit it significantly, especially design-only policies.
Does General Liability backstop E&O gaps?
Not usually. GL excludes professional services, and E&O excludes physical work. Without coordination, gaps are common.
When should agents reassess a client’s E&O coverage?
Any time the client adds services, takes on advisory roles, raises capital, or changes how they generate revenue.
The Case for Form-First Thinking
Labels can mislead, and policies that look identical on paper can behave very differently under pressure. That’s why agents partner with specialists who live in the details. With deep professional lines expertise and claim-driven insight, Jencap helps agents move beyond surface comparisons and toward coverage that actually performs when it matters most.
You don’t have to commit these E&O definitions to memory. Just rely on us to help you come up with the right answers when the questions come.
