Errors and Omissions Liability Insurance 101
It’s good news, bad news situation. The bad news: Lawsuits, once a measure of last resort, are now commonplace in settling disputes. The good news? You can protect yourself, and your business and reputation, by investing in Errors and Omissions Liability Insurance, also known as E&O or Professional Liability or Professional Indemnity Insurance. Professional Liability Insurance is liability insurance that enhances any business owner’s policy by safeguarding against catastrophic loss in the event of a lawsuit due to a negligent act, error or omission in the course of offering professional service to a third party for compensation. In addition to claims of error, omission, or negligence, it can also protect against slander, libel and breach of contract.
Who Needs Errors and Omissions Liability Insurance Coverage?
Errors and Omissions Liability Insurance is appropriate coverage for anyone who gives advice, makes educated recommendations, designs solutions, or represents the needs of others. Service professionals, such as accountants, computer consultants, software developers, planners, architects, real estate agents, contractors, etc., are prime candidates for carrying professional liability insurance. Specialized forms of E&O Liability Insurance coverage are also available to professions such as appraisers, real estate agents, insurance agents, home inspectors and notaries. Errors and Omissions Liability Insurance policies are designed to cover the large legal defence costs that are incurred trying to prove liability or innocence. Errors and Omissions Liability Insurance policies also ultimately cover the final judgment if the business owner does not win the lawsuit.
Errors and Omissions Liability Insurance Policy Overview
Errors and Omissions Liability Insurance coverage kicks in where your Commercial General Liability policy does not provide coverage, such as for service errors, or other professional liability issues. E&O Liability Insurance policies also include defence costs, which can be quite substantial even if liability is not found. Professional Liability Insurance policies typically do not provide coverage for non-financial losses or for intentional or dishonest acts. E&O Liability Insurance policies generally have both a claim limit and an annual aggregate limit, which is based on the insured’s exposure. The Errors and Omissions Liability Insurance claim limit is the maximum amount that will be paid for any single event, and the annual aggregate limit is the maximum that will be paid in any one year. Typical Errors and Omissions Liability Insurance limits differ depending on the type of business.
Count on the Errors and Omissions Liability Insurance Experts
There are many different forms of Errors and Omissions Liability Insurance and multiple factors to consider when purchasing E&O Liability Insurance coverage for your business. Because there isn’t a standard policy, an experienced broker who understands your company and E&O Insurance can knowledgeably design a policy to meet your needs.
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