New York State Asbestos Investigator Practice Exam

What can trigger a company's need for errors and omissions insurance?

1. Physical injuries at the inspection site

2. Misjudgments from inspections

3. Loss of clients

4. Failure to report findings

The correct answer is: Misjudgments from inspections

Errors and omissions insurance (E&O insurance) is specifically designed to protect businesses against claims arising from inadequate work or mistakes in professional services. Misjudgments, in the context of inspections, can lead to various issues, such as inaccurate assessments, overlooked hazards, or failure to identify asbestos-related risks. If a client perceives that an inspector did not meet the expected professional standards, this may result in claims of negligence, which are exactly the types of incidents that E&O insurance is intended to cover. When a company misjudges an inspection, it not only risks reputational damage but also potential financial loss associated with legal actions taken against them for those errors. The insurance acts as a safeguard against the costs of defense and any settlements or judgments that might arise. The other options, while relevant in context, do not directly lead to a need for errors and omissions insurance. For example, physical injuries at an inspection site would typically invoke general liability insurance rather than E&O. Loss of clients and failure to report findings could reflect operational issues or compliance problems, but they do not inherently involve the critical professional mistakes or oversight that E&O insurance specifically addresses.