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
While professional liability policies provide broad coverage for errors and omissions, they also contain common exclusions that may limit coverage under certain circ*mstances. Just a few of the more common exclusions include those for intentional or dishonest acts, bodily injury, and property damage.
What is typically not covered under liability insurance? ›
Intentional damage and contractual liabilities are generally not covered in liability insurance policies. Unlike other types of insurance, liability insurance policies pay third parties, and not policyholders.
What are some situations that liability insurance doesn't cover? ›
For example, your commercial general liability insurance policy doesn't cover:
- Employee injuries or illnesses resulting from their work. ...
- Damage to your own business property. ...
- Automobile accidents caused by you or your employees while driving for work. ...
- Errors in professional services.
These policies do not cover criminal prosecution and certain liabilities that may arise in civil court not listed in the policy. This includes illegal acts, intentional deeds of wrongdoing, or criminal activity.
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 does liability coverage not protect against? ›
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 are the exclusions for professional indemnity? ›
Typically, a professional indemnity policy will exclude any fines or penalties. This includes penalties (civil and criminal), punitive, aggravated or exemplary damages.
Does professional liability cover discrimination claims? ›
Professional liability policy won't cover any matter arising out of actual or alleged discrimination. 4. Professional liability insurance does not cover anything arising out of sexual therapy, where sexual contact is a form of treatment.
What is excluded from liability coverage? ›
Injuries or damage that the policyholder intentionally caused will not be covered. Similarly, contractual liability arising from assumed contractual obligations is typically excluded.
Personal liability limits
You may be able to choose your personal liability coverage limit; often the three choices are $100,000, $300,000, or $500,000. Your limit typically applies to covered damages that you're legally liable for. Get tips for figuring out how much homeowners insurance you need.
Which of the following is not liability coverage? ›
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.
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.
What is excluded under errors and omissions insurance? ›
Many E&O policies exclude claims resulting from any of the following: Bodily injury or property damage. Employment-related acts such as wrongful termination and discrimination.
What is the difference between professional indemnity and errors and omissions? ›
Is errors and omissions coverage the same as professional indemnity insurance? Yes. Professional indemnity insurance provides the same coverage as errors and omissions insurance. There are essentially no differences between the two, but instead are just two different terms for the same kind of coverage.
What are the elements of professional liability? ›
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 are the exclusions for E&O insurance? ›
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.
