Errors and Omissions Insurance. Depending on your business, you may hear the term errors and omissions insurance for professional liability or Medical Malpractice for the medical profession. However, there is no difference in these coverages.
It solely depends on professional business anyone practices; some professional liability insurance is mandatory to comply with industry standards. Local government or professional councils may mandate that their professionals such as attorneys or medical professionals either carry malpractice / professional liability insurance or advertise their insurance status to clients.
Professional liability insurance covers any liability claim for negligence, errors and omissions while providing insured professional services. Some claim examples such as a medical doctor misdiagnosed a patient or prescribed the wrong medicine, and a lawyer put in the wrong amount on the acquisition contract. Anyone could be held personally liable for errors or omissions working as a professional.
Businesses that provide professional services or give advice to clients should consider purchasing professional liability insurance. It protects when a business owner is sued for negligence because their work doesn't meet a client's expectations.
Businesses that should carry professional liability insurance can include:
Real estate agents
Professional liability insurance protects a business against actual or alleged errors and omissions when providing professional services, such as giving incorrect advice, an omission, or failing to deliver a service.
Professional liability insurance can also offer coverage for claims arising from services provided in the past and work performed anywhere in the world.
The main difference between general liability and professional liability is in the types of risks they each cover. Commercial General Liability Insurance covers physical risks, such as bodily injuries and property damage. Professional liability covers more abstract risks, such as errors and omissions in the services your business provides.
It's important to understand that a general liability policy won't protect against these risks.
Errors and omissions insurance, also known as E&O insurance and professional liability insurance, helps protect you from lawsuits claiming you made a mistake in your professional services. This insurance can help cover your court costs or settlements, which can be very costly for your business to pay on its own.
Most insurance brokers or agencies may carry professional liability insurance. Talk to your broker or call us for a free, no-obligation quote.
To determine if any professional is eligible to purchase professional insurance, a prospect will usually ask to complete an application form upon understanding the business line. The form's questionnaire will determine if a person or a company is eligible upon review and underwriting by the insurer.
Commercial General Liability insurance is mostly available as an occurrence policy, while errors and omissions insurance, directors and officers insurance would have claims-made coverage.
By comparing both policies' differences,
An occurrence-based policy will protect the insured as long as the loss happened while the insurance policy remains active. A claim can be filed with the insurer as long as the insurance remained in force when the incident occurred. Occurrence policies accommodate "long-tail" events – situations that don't produce lawsuits or claims right away.
A claims-made policy, A claim can be filed only during the policy is active. Should an insurable event happen after the policy's retroactive date, the insurer should provide coverage. With a claims-made policy, the insurance must be active when a claim is filed. If a policy is canceled or missed premium and the insurer cancelled it, there will be no insurance coverage.
Construction contractors involved with an in-house design will require professional liability insurance. For additional protection, the contractor will need commercial general liability insurance for all other liability coverage. Suppose the contractors require insurance for the tools or building material. In that case, the contractors will need builders' risk insurance with equipment or contractors' tools as the professional liability insurance will not provide any other coverage outside of its liability coverage. See the section below for further information.
Depending on the revenue, the clients, experience, and number of workers. A typical error and omission insurance for architects may cost anywhere from $3000 to $8000.
Depending on the revenue, if they are involved in investment products, a typical error and omission insurance for a life insurance agent may cost anywhere from $500 to $4000.
Insurance companies may allow additional insurance to add to the error and omission insurance with Commercial General Liability and property insurance.
As long as there is income associated with the same business line, the taxpayer could deduct the entire insurance premium as a business expense as insurance may be considered part of a cost to run a professional business.
Our expert commercial brokers can help advise you on setting up a policy to protect your unique business. Call us today, or start a quote online.