Being a student, I have a keen interest in learning new things and yesterday, I saw professional liability insurance. What does it mean with professional liability insurance (errors and omissions insurance)?
Errors and omissions insurance commonly called as E&O stands for the protection of the organizations and its employees from the allegations and inadequate demands of the clients. It includes the court case costs and the amount that is specified between both the parties as per insurance contract. It can be referred to as the coverage amount required when one of the parties fails to complete their provided task due to which there is a financial loss.
This kind of practice is followed during the professional tasks which require a higher amount of risks of financial loss. This is a kind of legal term which is very vast in its meaning. It cannot be explained completely because it has several categories under which the term changes for some specified reasons.
A “PLI” or “Professional Liability Insurance” is the type of insurance that protects professionals like accountants, lawyers, and physicians from negligence and other claims initiated by their clients. Professionals with expertise in a particular area need this type of insurance as general liability insurance policies don’t offer or provide protection against claims originating from business or professional practices like negligence, malpractice, or misrepresentation.
This type of insurance is also called “Professional Indemnity Insurance” or “PII” and is more commonly known as “Errors & Omissions” or “E&O” in the United States. It is a kind of liability insurance that helps protect professional advice-providing and service-providing individuals and companies against taking the full cost of defending from a negligence claim made by a client and damages awarded in such a civil lawsuit.
Professional Liability Insurance may have different names depending on the profession like for example, medical malpractice insurance for the medical profession and errors & omissions insurance for real estate agents. Professional Liability Insurance policies are normally arranged on a claims-made basis. This means coverage is good only for claims made during the policy period.
