Process Server Risk Management: Bonding vs. Insurance “PART 1”
The following answers to frequently asked questions illuminate exactly how General Liability and E&O Insurance work to protect the personal assets of Process Servers and Process Service Agencies alike.
What is E&O Insurance?
Errors and Omissions (E&O) is an insurance policy that protects your financial assets in the event of alleged financial harm to a third party, as a result of an error or omission by the process server. Most commonly, this would occur from alleged wrongful service, missed filing deadlines, blown statute of limitations, etc.
Process Servers, like other professionals such as lawyers, accountants, architects and doctors, have an exposure to liability for the services they perform. In the case of Process Servers, state statutes uniformly affirm that a Process Server has unlimited financial liability to the public harmed by an error or omission committed by him or her; OR in the case of the use of a subcontractor, the Agency from which the service order originated.
What does E&O Insurance cover?
E&O, as the name implies, covers both errors and omissions. Generally speaking, E&O Insurance covers a mistake made by a Process Server that causes financial harm to a Defendant, Deponent or Client of the Server. A mistake can be an “error” – an act the Process Server should not have done. A mistake can also be an “omission” – an act left undone that the Process Server should have performed. Both can cause financial harm and the Notary should be protected against both.
It is important to note that E&O Insurance covers only unintentional or negligent errors and omissions; E&O Insurance will not cover intentional errors or acts.
A correctly written E&O policy will cover losses that must be paid to a party injured by the Process Servers error or omission, as well as defense costs incurred in investigating, defending or settling liability up to the policy limit.
What is my exposure to risk if I always follow the rules and never do anything wrong?
As the famous saying goes, “To err is human.” No Process Server, however diligent and well-intended, is immune from making a mistake. And, the fact that you have not made an error or omission when serving until now doesn’t mean that in the future you might not make one.
Even if you never make a mistake, parties related to the service(s) you performed may allege that you made an error or mistake that harmed them. They could still file a claim with your insurance company or name you in a lawsuit. At the end of the claim process or lawsuit you may be found to have done nothing wrong, but you may be left with defense costs and legal expenses that you incurred in representing and defending yourself in the case. E&O Insurance will cover these legal expenses, even if a claim is denied or a jury acquits you of liability.
Purchasing E&O Insurance is an important safety measure that protects you from a mistake or an outright false claim; and choosing the right coverage is the most important step. If you have questions or want more options, please give us a call at 1-855-356-0875 x1008 – H. Eric Vennes