How to record E&O claim deductible payment
Accounting for the payment of an Errors & Omissions (E&O) insurance deductible by the brokerage following a professional liability claim.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| E&O Claims Expense | Debit | 5,000.00 | - |
| Operating Cash | Credit | - | 5,000.00 |
💡 Accountant's Note
When a claim is settled or defended under the broker's professional liability policy, the broker must pay the agreed-upon deductible, which is an operating expense.
Practitioner & Systems Framework
💻 ERP Architecture
Allocate to a specific professional liability expense code to track loss ratios for the firm's own insurance.
⚠️ Audit Flags
High frequency of deductible payments may indicate systemic operational failures in policy placement.
📄 Required Documentation
Claim settlement release forms and payment demand from the E&O carrier.
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Discussion & Community Questions
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