Error & Omission Insurance

[NotEasy]

Has anyone claimed the error & omission insurance before? ( I am talking about the 10,000 bond that is required by the State of California and I consider it E&O insurance, please correct me if I am wrong)

In the last three years, I had a few small compensations made to my client at the total of about $200. Is it worth to file a claim for it? I am worried they will raise the premium if I file a claim (just like what the Auto Insurance Company does).

[taxmandan]

I've not filed a claim, but do have a $1,000 deductible so it would have to be a significant amount before it would matter. You are correct, the premiums would be raised if you started filing claims, or even cancelled if you had several claims in a short period of time.

I have covered interest/penalties a few times over the years in small amounts for clients when the cause was my error.

[S T]

Me too

A few interest and penalties - not much more - some were my fault and some were the clients error - but a valuable client - so I paid in the interest of goodwill keeping the client.

Depends on your deductible and the cost of E&O is pretty high from what I have experienced - I would like to keep the premiums low and use the coverage for when I might really need it. Something large! I hope that day never comes

Sandy

[OtisMozzetti]

bond is different than errors & omissions insurance

Has anyone claimed the error & omission insurance before? ( I am talking about the 10,000 bond that is required by the State of California and I consider it E&O insurance, please correct me if I am wrong)

My understand of the meaning of "bond" is that if you the tax practitioner owe money to the State of California Franchise Tax Board connected with your tax practice, and if you fail to pay the FTB; then the insurance company that furnished the bond guarantees that they will pay the FTB their money (perhaps after the insurance company sends out all the bulldogs to make you pay up). You would not be able to file an insurance claim yourself for errors and omissions compensations to your client.