Management talk: who said you don’t need E&O?
Most alarm dealers have Errors & Omissions (E&O) coverage along with their General Liability (GL). However, some believe that carrying GL only, and no E&O, is sufficient. Where did this idea originate? My family’s unique background in our industry can probably help shed some light on this question.
My dad was a veteran Farmers Insurance agent and I got my start in the industry working for him some 30+ years ago. They would insure local households from “cradle to grave” covering everything from home, auto, life, boat, RV, etc… including any small business insurance those households might need. That total-household acquisition is the goal for most home town main-street agencies, whether Farmers, State Farm, or Allstate. My dad insured multiple generations for many households, and they would pass him down like a family doctor from one generation to the next.
Like most of those main-street insurers, Farmers wrote a lot of GL for contractors, and still does. But my dad knew more than the average Farmers agent and was quick to point out that when it comes to E&O, Farmers *can’t* write it (their underwriters would eventually admit to their agents), and last time I checked the same was true for most of the other main-street insurers, like Allstate and State Farm. That wouldn’t be a problem for most of their small contractor clients, even electricians doing pre-wire, but as soon as they start installing activated alarm systems they need a contract and they need E&O. The problem is since the main-street insurers aren’t set up to write E&O, they don’t train their agents about the unique need some industries have for the coverage, and so those most of those main-street agents unwittingly tell their small business clients that their GL is fine as is, and the businesses that started off as electricians or low-voltage contractors, with GL-only insurance, think they’re fully covered until they talk to someone that knows better, or have a claim on a monitored system.
Remember, GL may cover you for pulling wire or other basic electrical ops, but it doesn’t cover claims of injury/damage arising from a smart system you programmed not performing as intended. So as soon as someone turns on or activates a burg or fire or other system you’ve set up, you have an E&O exposure that GL by itself isn’t designed to cover. GL alone won’t help you there. The good news: GL including E&O through our program for alarm professionals will, and usually for no more than you’d pay for GL by itself.
Moral of the story: while it’s great to find (inherit?) a local agent that insures all aspects of your personal life, business insurance is a different animal, and you are better served by having a broker that specializes in and is knowledgeable about your industry that can help take care of your business, rather than an agent that is tied to just the one company they have your home, auto and life insurance with and is stuck trying to shoe-horn your business in there as well.
We specialize in business insurance for alarm dealers and central stations. General Liability with Errors & Omissions, Workers Comp, Commercial Auto, Property, Inland Marine, Bonds… if your alarm business needs the coverage, we can help, and save you money in the process.
For more information contact us today at info@eclipseinsurance.com or call us directly at 800-530-4448.
About the Author
Larry St. John is a 20+ year veteran of insurance and risk management for the construction and electronic security industries.
He can be reached at LStJohn@eclipseinsurance.com
