E&O claims arise from which factors?

• A. Unethical behavior only
• B. Lack of knowledge only
• C. Both unethical behavior and lack of knowledge
• D. Neither

Answer: (C)

E&O claims stem from professional responsibility—errors and omissions in how a claim is handled. They can arise when you lack the necessary knowledge to apply policy terms correctly, leading to incorrect settlements, misinterpretations, or missed deadlines. They can also arise from unethical behavior that violates professional standards, such as misrepresentation, conflicts of interest, or actions intended to deceive or gain improper advantage.

Because E&O covers liability for both negligent mistakes due to knowledge gaps and misconduct due to unethical actions, the best choice is the one that includes both factors. For an adjuster, this means claims can result from either not knowing the right procedures and coverages or from engaging in unethical conduct that harms the insured or insurer.