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Professional Liability
A Professional Liability policy can protect your company against claims against your professional service.
Professional liability insurance, generally referred to as errors and omissions (E&O insurance), is a special type of coverage that protects your business against claims that a professional service you provided caused your client to suffer financial harm due to oversight, mistakes or negligence on your part (errors) or because you failed to perform some service or honor your contractual agreement (omissions).
E&O insurance would cover the cost of defending your business in a civil lawsuit and certain damages awarded, even if the legal action turns out to be baseless.Usually, states mandate certain professions to have coverage, such as professionals in the legal, medical or insurance field. It’s important to note two things. One, this coverage is usually not offered in a GL policy because they are not designed to respond to these types of claims Two, this would not cover any intentional or criminal wrongdoing. This coverage is for mistakes and oversight in your day-to-day business operations that would tie up cash flow while defending and settling.
Ex: The contractor made a cost estimate of $2 million for a warehouse project. A loading platform was later found to be inadequate to meet the stated needs of the warehouse. With the revisions, the project cost $2.5 million. The contractor was held liable for the $500,000 difference.
What's Included?
A typical Professional Liability policy includes coverage for:
- Negligence
- Misrepresentation
- Violation of good faith and fair dealing
- Inaccurate advise or counsel
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