Insurance broker errors and omissions claims: real-world examples
Reviewed by Matthew Bartlett, Director, Apex Insurance Brokers Limited · Last reviewed 2026-08-05
“Errors and omissions” is simply the insurance-industry name for professional negligence claims — and brokers are far from immune to them. Advising on cover is a professional service, so when a client discovers a gap only after a loss, the broker who placed the policy is an obvious target. The examples below are anonymised and illustrative, drawn from the common patterns UK brokers see, not from any named firm or reported case.
Example 1: The wrong cover was arranged
A manufacturing client asks a broker to arrange business interruption cover. The broker places a policy with an indemnity period the client had assumed would be longer, and a sum insured based on an outdated turnover figure. A fire halts production for eleven months. The policy stops paying at month twelve of gross-profit calculation but the indemnity period runs out first, and the sum insured is exhausted well before the true loss is met.
The client argues the broker failed to establish their actual exposure and recommended a policy that did not match the risk. Where a broker does not properly fact-find or explain the consequences of a limit, an E&O claim for the shortfall is a realistic outcome. The lesson: scope of cover and adequacy of limits are the broker’s bread and butter, and getting them wrong is the single most common source of claims.
Example 2: Non-disclosure passed straight through
A commercial client mentions, almost in passing, a previous refused claim and an unspent conviction of a director. The broker does not flag the significance, does not record it, and does not present it to the insurer. Under the Insurance Act 2015, a commercial client owes a duty of fair presentation of the risk. When the omission surfaces at claim stage, the insurer avoids or reduces the settlement.
The client turns to the broker, arguing the broker — as the professional — should have recognised material information and ensured it reached the insurer. A broker who receives material facts and fails to relay them can be liable for the resulting uninsured loss. This is one of the most avoidable E&O exposures: capturing and passing on disclosure is a core broker duty, and a clear file note is often the difference between defending a claim and losing it.
Example 3: A missed renewal or deadline
A broker intends to renew a client’s cover but a diary system fails and the policy lapses. During the uninsured gap, the client suffers a theft. Alternatively, a broker misses a claim-notification deadline in a claims-made policy, and the insurer declines the late notice. In both scenarios the client is left carrying a loss that would otherwise have been covered.
Administrative and process failures — lapsed cover, unactioned instructions, missed notification windows — are a persistent category of broker E&O claims precisely because they turn on evidence of what was and was not done, and when.
Example 4: Under-insurance and the average clause
A broker insures a commercial property on a sum insured the client supplied years earlier. The buildings are now materially under-insured against full rebuild cost. After a partial loss, the insurer applies the condition of average and proportionately reduces the claim. The client argues the broker should have prompted a reinstatement-cost review or a professional valuation.
Whether such a claim succeeds depends heavily on what the broker advised and documented about valuation. But the pattern is a familiar one, and it shows why broker advice and record-keeping around sums insured matter so much.
How these claims break down
| Failure type | What goes wrong | Typical trigger |
|---|---|---|
| Wrong cover | Policy or extension does not match the client’s actual risk | Uninsured loss after a claim |
| Non-disclosure passed on | Material fact not relayed to the insurer | Insurer avoids or reduces claim |
| Missed deadline | Lapsed renewal or late notification | Loss falls in an uninsured gap |
| Under-insurance | Sum insured too low; average applied | Proportionate claim reduction |
| Poor advice or documentation | Warnings not given or not recorded | Dispute over what was advised |
Every broker firm carries this risk. Make sure your professional indemnity cover is fit for the way you actually place business.
Get a PI quote →Why professional indemnity insurance is central
For an FCA-authorised broker, professional indemnity (PI) cover is not optional — the regulator requires adequate PI as part of a firm’s capital resources. Beyond compliance, PI is the practical backstop for the scenarios above. A single E&O claim can run into six or seven figures once the uninsured loss, legal defence costs and the client’s own losses are added together.
PI cover responds by funding the legal defence — even where the allegation is ultimately unfounded — and by paying damages or settlement up to the limit of indemnity. Because these claims are almost always written on a claims-made basis, the policy that responds is the one in force when the claim is made, not when the original advice was given. That makes continuous cover, and run-off cover after a firm stops trading, genuinely important. A limit of £1m, £2m or £5m is a starting point; the right figure depends on the size and complexity of the risks you place. You can start a PI quote here and set the limit to match your book.
How brokers reduce the risk of an E&O claim
- Fact-find thoroughly and record the client’s stated exposures and turnover figures.
- Explain the consequences of every material limit, exclusion and indemnity period in writing.
- Capture disclosure the moment a client mentions it, and confirm what has been presented to the insurer.
- Use a robust diary system for renewals and notification deadlines, with a fallback if it fails.
- Prompt clients to review sums insured and obtain professional valuations where average could bite.
- Keep contemporaneous file notes — the defence of most E&O claims lives or dies on the paper trail.
Common questions
What is the difference between errors and omissions and professional indemnity?
They describe the same thing from two angles. “Errors and omissions” is the type of claim — a mistake or something missed in professional work. Professional indemnity is the insurance policy that responds to those claims. In the UK, “PI” is the more common term; “E&O” is used more in the US and in some financial-lines contexts.
Can a broker be liable if the client didn’t disclose something?
Potentially, yes. If the client gave the broker material information and the broker failed to pass it to the insurer, the broker — not just the client — can face a claim for the resulting loss. If the client concealed information from the broker entirely, liability usually stays with the client. The file record is decisive.
Does PI insurance cover the legal costs of defending a claim?
Yes. A key benefit of PI cover is that it funds the cost of investigating and defending an allegation, including where the claim is groundless, in addition to any damages or settlement — subject to the policy terms, excess and limit of indemnity.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This guide is general information, not advice on a specific policy or a substitute for your policy wording.