Errors and Omissions Clause (Programme)
The errors and omissions clause preserves cover under an international programme despite inadvertent administrative mistakes, such as a late notification or misrecorded local entity, provided the error is rectified promptly upon discovery.
- Clause type
- Condition
- Origin/Market
- International programme
- Favours
- Neutral
- Negotiability
- Negotiable
Purpose
International programmes and reinsurance contracts process large volumes of bordereaux, premium reports and claims data across many local entities; purely administrative mistakes, such as a newly formed subsidiary reported late or a miscoded premium, are practically unavoidable. The errors and omissions clause ensures that such an inadvertent mistake does not automatically void cover, but instead restores both parties to the position they would have occupied had the error not occurred.
Effect and limits
The clause expressly applies only to unintentional, inadvertent errors and omissions, not to deliberately false information or to errors that are not rectified promptly once discovered. It also does not override separately agreed deadlines and duties elsewhere in the programme, such as a distinct notice of loss or premium payment clause, and only operates to cure purely administrative slips.
Negotiation and practice
Programme leaders should establish internal controls that detect errors in bordereaux and local reporting early, since the clause presupposes prompt correction upon discovery and offers no retrospective cover for persistently ignored mistakes. When drafting, it should be made clear that the clause cannot be used to circumvent deadlines expressly agreed elsewhere in the contract.