When choosing your professional liability insurance, also known as Errors and Omissions (E&O insurance), it is as important to understand what isn’t covered by the policy as it is to know what is covered. Being sued for an alleged breach of professional services is bad enough. Add to that the distress you would feel to discover that your insurance does not provide coverage for the act that is the basis of the lawsuit.
There are some events that occur in the workplace that may be covered under one type of policy but are not covered by your E&O insurance, which isdesigned to protect you fromclaims of negligence, such as misrepresentation, inaccurate advice, and violation of good faith and fair dealing. Become familiar with your E&O policy to be sure you know what is and what is not covered.
What Is Not Covered by Professional Liability Insurance
YourE&O insuranceprovides coverage for workplace negligent mistakes and oversights, but there are some events that are not covered. Examples are:
- Intentional conduct. No matter how annoying clients might be, if you intentionally cause them harm, like misplacing the file or refusing to return phone calls, your E&O insurance will not cover the damages claimed.
- General liability claims.Professional Liability insurance does not cover personal injury actions. For example, if a client trips and falls at your workplace, your E&O policy does not cover that claim. This is why you also need aGeneral Liabilitypolicy that does cover bodily injury lawsuits
- Employees injured at the workplace.Workplace injuries are covered byWorkers’ Compensationinsurance, not by Professional Liability insurance.
- Employment disputes.An employment dispute, such as a claim of sexual harassment, wrongful termination, workplace discrimination, and other similar claims, are not covered under your E&O policy. They may be covered underEmployment Practices Liability insurance (EPL).
- False advertising.There is no coverage under your E&O policy, or any other policy, that covers false advertising. False advertising includes exaggerating your work experience, claiming you graduated from a prominent school when you did not, and other statements designed to attract clients, but are only hyperbole.
Know the Difference in “Claims Made” and “Occurrence”
Even if the claim against your business is one that would be covered under your E and O insurance, it still may not be covered, depending on the type of Professional Liability policy you have.
- Claims made. This means that the policy must be in effect both at the time the event took place and when a lawsuit was filed.
- Occurrence. A claim is covered if the event occurred during the time a policy was in place even if the policy is no longer in effect at the time the claim is made.
Our agents atTransparity Insurance Servicesare committed to helping you understand your specific insurance needs. Every business needs the protection of E&O insurance.Contact usand we will be happy to answer your questions.
About Transparity Insurance Services
Transparity Insurance Serviceswas founded for the purpose of helping clients to ensure their property and assets with no hassle. We are committed to providing a simple, easy, efficient, and positive experience to all of our clients, and prioritize open and transparent communication with our clients. Through our excellent customer service and technology, we can help you to find the right insurance program at a competitive price. Contact us today at(855) 889-2037 to learn more about what we can do for you.
FAQs
Professional liability coverage does not cover anything arising from allegations of physical and/or sexual abuse. However, if the claim is unfounded, and the insured doesn't admit to guilt, the insurance carrier will provide defense coverage.
What is typically not covered under liability insurance? ›
Keep in mind that liability insurance coverage doesn't cover your own injuries or damaged property. It only applies in situations where you're legally responsible for someone else's damages.
What does E&O insurance not cover? ›
E&O insurance doesn't cover claims for property damage, bodily injury, workplace injuries, data breaches, intellectual property violations, or criminal acts such as fraud.
What is considered professional services in insurance? ›
“Professional services” means those services that the Insured is legally qualified to perform for others in the Insured's capacity as an architect, engineer, land surveyor, landscape architect, construction manager, scientist, technical consultant, interior designer, land planner, golf course designer or as otherwise ...
Which of the following is not a professional liability policy? ›
Final answer: A Commercial umbrella insurance is not a type of Professional Liability Insurance. Professionals often have their own liability insurance policies to protect against claims of negligence or failure to perform professional duties.
What is a limitation of professional liability? ›
Such provisions typically limit potential liability to either a fixed amount or the amount of fees on the engagement, whichever is greater. California courts have held that such provisions are enforceable, but that they will be strictly construed, meaning they will not limit liability for claims or damages outside of ...
What are some situations that liability insurance doesn't cover? ›
A general liability insurance policy won't help your business with:
- Commercial auto accidents that you or your employees cause while driving for work. ...
- Employee injuries or illnesses due to their work. ...
- Damage to your own business property. ...
- Mistakes or errors in the professional services given to customers.
Answer. The type of coverage that is NOT a major type of liability coverage in a standard auto insurance policy is Collision. Liability coverage typically includes bodily injury and property damage, but collision coverage is for your own vehicle's damages when you are at fault.
Which of the following is not covered by general liability insurance? ›
Key Exclusions in Commercial General Liability Policies
Injuries or damage that the policyholder intentionally caused will not be covered. Similarly, contractual liability arising from assumed contractual obligations is typically excluded.
Are E&O and professional liability the same? ›
Professional Liability insurance, also known as Errors and Omissions (E&O) coverage, is designed to protect your business against claims that professional advice or services you provided caused a customer financial harm due to actual or alleged mistakes or a failure to perform a service.
Examples of E&O Claims
- Breach of contract. Clients can sue tech companies for breach of contract if the delivered product or service does not align with the details stipulated in the contract. ...
- Breach of warranty. ...
- Negligence. ...
- Copyright infringement. ...
- Fraud. ...
- Misrepresentation. ...
- Defamation. ...
- Cyber crime.
Dishonest, Intentional, Malicious or Criminal Acts
While E&O policies cover negligent acts, errors and omissions, they generally exclude claims arising out of dishonesty, intentional wrongdoing or criminal acts.
What is the difference between professional and liability insurance? ›
General liability covers physical risks, such as bodily injuries and property damage. Professional liability insurance covers more abstract risks, such as errors and omissions in the services your business provides.
What falls under the category of professional services? ›
Professional services are nonphysical products or services that individuals or companies provide to customers to help them manage or improve a specific area of their businesses. For example, an acting coach offering lessons to actors could be a professional service.
What do professional service providers include? ›
Professional service providers include lawyers, accountants, investment brokers, and other third parties that act as financial liaisons for their clients. These providers may conduct financial dealings for their clients.
What are the exclusions for professional indemnity? ›
What are the common exclusions in professional indemnity cover?
- Prior known circ*mstances: claims related to circ*mstances known to the business before taking out the insurance policy are excluded.
- Incidents before the policy date: claims relating to incidents that occurred before the specified policy date are excluded.
The elements of a cause of action in tort for professional negligence are “(1) the duty of the professional to use such skill, prudence, and diligence as other members of his profession commonly possess and exercise; (2) a breach of that duty; (3) a proximate causal connection between the negligent conduct and the ...
What is professional liability claims made coverage? ›
A claims-made policy covers you for any covered claim provided it meets two criteria: You are insured when the claim is made. If you no longer need coverage, you can purchase a “tail” to protect you for the past.
What does professional liability coverage protect against legal? ›
Professional Liability Insurance Basics
Professional liability insurance, also known as Errors & Omissions (E&O) coverage, protects businesses against losses resulting from negligence, errors and omissions in the performance of a professional service.
