Professional Liability and Errors & Omissions Insurance
Insurance for O&G Professionals, Consultants, and Physicians
Professional Liability insurance, also known as Errors & Omission insurance, offers coverage for mistakes and errors made by you or someone at your company. Professional liability insurance helps protect individuals providing professional advice and consultations, and service-providing individuals (like doctors or nurses) and companies from bearing the full cost of defending a negligence claim made by a client. Professional liability insurance also covers damages awarded in such a civil lawsuit.
The traditional General Liability Policy specifically excludes any coverage for an Error & Omission claim, if there is a separate Error & Omissions policy available for a specific profession. The policy will typically not have an exclusion for a “trade”, for instance roofing, since the roofer is conducting business per his trade. However, the engineer who designed the roof will need to carry E&O insurance, since his work involved “professional services”.
Another instance may be that of a product company, diversifying and now providing technical support or technical services or making recommendations. Or a photographer who ruins a wedding shoot. While they may have coverage for someone tripping over their cables, there may not be coverage for an error they made on their shoot.
As is evident, there can be a murky separation in the business which may lead to a gap in coverage. Lawyers, accountants, healthcare professionals, engineers, architects, computer consultants, and a host of other “professionals” will need some form of professional liability insurance in order to defend themselves from claims that arise out of a professional nature. A new & emerging trend is to use the Professional Liability Insurance, as a cost recovery mechanism for cost over-runs.
Professionals and non-professionals are equally at risk for such extortion based tactics. Such claims are often brought about even before the conclusion of a project. The General Liability policy specifically excludes all Errors & Omission claims, so there is typically a greater urgency on the part of the Contractor or Professional to settle claims as quickly as possible with the least expense. And, such claims are not just against the Contractor, rather are brought about at both ends of the supply and design chain, the rationale being that all parties in the chain were negligent, i.e. the primary basis of an Error & Omission claim. With that in mind, more and more of the traditional “non professional” industries are opting for some sort of E&O coverage to provide defense and settlement of such suits.
As an insurance specialist recently stated, “the insurance game is changing, is your policy keeping up with the changing rules?”