Errors And Omissions

Summary of Errors And Omissions

A clause in an open insurance policy that permits the insured to secure cover retroactively for property inadequately insured through the clerical or administrative error of the insured, and where it is clear from the pattern or character of the insured's business that he would have provided coverage for the affected property except for inadvertent omission.

An errors and omissions clause is common to most marine cargo policies under which multiple shipments are declared periodically on a bordereaux, or listing of the particulars of the voyage and values of the property. Marine policies usually provide a given basis for insured valuation, e.g., invoice value plus 10 percent. Hence, if an insured suffered a covered loss but discovered that, through clerical error, the goods were declared for invoice value only, or that the shipment was not declared at all, the insured could invoke the errors and omissions provision of his cargo policy by declaring the shipment for its correct value and paying the premium thereon.

(Main Author: William J. Miller)