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Professional Liability and Errors & Omissions
 

Professional liability insurance, also called Professional Indemnity Insurance or Errors & Omissions, protects professional practitioners such as Doctors, Architects, Quantity surveyors, Home inspectors, Lawyers, Physicians, Engineers, and Accountants against potential negligence claims made by their patients/clients.  Professional liability insurance may take on different names depending on the profession.  For example, professional liability insurance in reference to the medical profession may be called Medical Malpractice. Notaries public may take out errors and omissions insurance (E&O).   Professional Liability has expanded over the years to include those occupations in which special knowledge, skills and close client relationships are paramount.
 
 

Other potential E&O policyholders include, for example, real estate brokers, appraisers, and website developers. There are also specific E&O policies for technology companies, such as software developers, technology consultants and other creators of technology. This coverage focuses on the failure to perform, financial loss and error or omission of the products or services sold. Additional coverage for breach of warranty, intellectual property, personal injury, security and cost of contract can be added.

The primary reason for professional liability coverage is that a typical general liability insurance policy will only respond to a bodily injury, property damage, personal injury or advertising injury claim. The above mentioned professional services and products can cause claims without causing a bodily injury, property damage, personal injury or advertising injury. Common reasons alleged in making claims on these policies are negligence, misrepresentation, violation of good faith and fair dealing, and inaccurate advice. For example, if a software product fails to perform properly, it may not cause physical damages, personal or advertising injuries, therefore the general liability policy would not be triggered. It may, however, directly cause financial losses which could potentially be attributed to the software developer's misrepresentation of the product capabilities.

Professional liability insurance policies are generally set up based on a claims-made basis, meaning that the policy only covers claims made during the policy period, claims which may relate to incidents occurring before the coverage was active. It is important to continue your coverage, because canceling the policy, will in effect, make it as if you never had coverage for any incidents.
 

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