Here is a blub from a blog I wrote in January 2007, Understanding E&O Insurance:
The thing about E&O insurance that many do not understand is that it is a claims-made type of policy. What does that mean? Well, it means that in order to be covered a claim must be made during the policy period. The opposite would be an occurrence policy, which means that a claim is covered if the policy was in force when the loss-causing event occurred. In the E&O world, occurrence policies do not exist; they are all claims-made policies.
With a claims made policy, your current policy will have a retro-active date. You are covered for any error or ommission after your retro-active date, but you must keep your policy active because you have to have coverage at the time the "claim is made" as well.
You never want a lapse in coverage or your may lose your retro-active date and find that you don't have coverage on any work you have done before you get a new policy in place.
Best,
Robert A. Franco
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