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  • Errors and Omissions Insurance: What You Need To Know

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    What Is Professional Liability (Errors & Omissions) Insurance?

    Professional liability insurance, more commonly known as errors and omissions (E&O) insurance, is a special type of coverage that protects your company against claims that a professional service you provided caused your client to suffer financial harm due to mistakes on your part (errors) or because you failed to perform some service (omissions).

    E&O insurance can cover the cost of defending your company in a civil lawsuit and certain damages awarded, even if the legal action turns out to be groundless. Professional liability insurance is required by law in some areas for certain kinds of professional practices, especially medical and legal, where it is more commonly called malpractice insurance. This type of protection is not part of your general liability insurance or homeowners insurance.

    Coverage does not include criminal prosecution, and there is a wide range of potential liabilities under civil laws that may not be covered unless specifically written into the policy. Common claims that professional liability insurance covers are negligence, misrepresentation, violation of good faith and fair dealing, and inaccurate advice. Some policies could also cover privacy violations.

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    You can get highly detailed publications covering every aspect of professional liability insurance from the International Risk Management Institute, Inc. (IRMI). In addition, state and national professional organizations may be a source of information and perspective on the coverage you may need.