Professional liability insurance, also known as errors and omissions (E&O) insurance, is a type of insurance policy that provides coverage for professionals who may face claims of negligence, errors, or omissions in the performance of their professional duties.
Professionals who may benefit from professional liability insurance include doctors, lawyers, accountants, architects, engineers, consultants, and other professionals who provide expert advice or services to their clients.
Having professional liability insurance can provide peace of mind to professionals and their clients, as it helps ensure that clients have a means of recourse if they believe they have been harmed by the professional’s actions or advice. It can also help professionals protect their reputation and financial assets in the event of a lawsuit.
What Does Professional Liability Insurance Cover?
Professional liability insurance, also known as errors and omissions (E&O) insurance, covers claims and damages that arise from professional negligence, errors, or omissions.
The specific coverage provided by a professional liability insurance policy can vary depending on the profession and the individual policy. However, some common types of coverage include:
⦁ Negligence: This type of coverage protects professionals against claims of negligence or failure to exercise reasonable care, which can result in financial or reputational harm to a client.
⦁ Errors and Omissions: This coverage protects professionals against claims of errors or omissions in their work, which can result in financial loss or damage to a client’s reputation.
⦁ Breach of Contract: This coverage protects professionals against claims of breach of contract, such as failing to deliver services or completing work as promised.
⦁ Defense Costs: Professional liability insurance may cover the costs associated with defending against a claim, including attorney fees, court costs, and expert witness fees.
What Does Professional Liability Insurance Not Cover?
While professional liability insurance, also known as errors and omissions (E&O) insurance, provides coverage for claims arising from professional negligence, errors, or omissions, there are certain types of claims that are typically excluded from coverage. These exclusions can vary depending on the specific policy, but some common exclusions include:
⦁ Intentional or criminal acts: Professional liability insurance typically does not cover claims arising from intentional or criminal acts by the insured professional.
⦁ Bodily injury or property damage: Professional liability insurance generally does not cover claims related to bodily injury or property damage caused by the insured professional. This type of coverage is typically provided by general liability insurance.
⦁ Employment practices: Claims related to employment practices, such as discrimination or wrongful termination, are typically excluded from professional liability insurance policies. This type of coverage is typically provided by employment practices liability insurance.
⦁ Fines and penalties: Professional liability insurance typically does not cover fines or penalties imposed by regulatory or governmental bodies.
⦁ Prior acts: Some policies may exclude coverage for claims related to acts that occurred prior to the policy period.
Conclusion:
In conclusion, professional liability insurance, also known as errors and omissions (E&O) insurance, provides coverage for professionals who may face claims of negligence, errors, or omissions in the performance of their professional duties. The policy covers legal costs and damages that may arise if a professional is sued by a client who alleges that they suffered financial or reputational harm as a result of the professional’s negligent actions or advice.
While professional liability insurance can provide important protection for professionals and their clients, it’s important to carefully review the policy to understand the specific coverage provided, as well as any exclusions or limitations. Additionally, professionals may want to consider purchasing additional types of insurance, such as general liability insurance or cyber liability insurance, to provide additional protection for their business.
What are the common exclusions and limitations of professional liability insurance policies?
