New to the world of insurance? Trying to figure out what the lingo is like and you’re already over your head in water? Thankfully, you won’t have to worry, and we’re here to let you in on the differences between errors and omissions insurance versus professional liability. This area can be complicated, as there are many names for some insurance policies, while offering the same things. Let’s clear the air.
Professional liability insurance is also seen as errors and omissions insurance. The interchangeability of these two phrases may be confusing, we’re here to let you in on why you would choose one over the other in an instance.
E&O Insurance, Professional Liability and Service Qualms
Since businesses have professional services, it can be hard to choose what is best for who, since most go for E&O policies without discussion – especially with policies that are the same but may fall under difference names. If you’re a business providing any type of service, suing for the following may be seen:
- A breach of contract
- Making an error
- Presenting incomplete work to the client
If you have completed any of the aforementioned (or following) mistakes, your client will try and come after to you for financial gain to recoup from their losses. A lawsuit may be filed against your business, and a professional liability insurance policy may be the way to go. An insurance policy as such will cover the following:
- Costs of court fees
- Judgements against you or settlements that need to be made
- Any type of defense fees
The most important thing to remember is that someone can sue you over virtually nothing, and in many cases, a person doesn’t do anything wrong. While the quality you provide is utterfy subjective, and the client may be incredibly difficult, they an exercise this right to sue you in the court of law and show their discontent up front.
Thankfully, there are insurance policies that will help you when this happens. Even if the lawsuit is miniscule and not anything to worry about, an insurance policy can still cover this without wasting the resources that you’ve lined up.
The Differences Between Malpractice, E&O, and Professional Liability
You may be wondering what the differences between the three names are, and it all lies in the career path you’ve chosen. While you’ll still get the same general coverage, some is meant for other careers because of the types of ways a client can come after you, and what kind of financial damages can occur.
- Professional Liability Insurance is specifically for engineers and those of the architect fields
- Errors & Omissions Insurance is specifically for those in the tech field, as well as real estate and accounting
- Malpractice insurance is infamously known for those in the legal world and medical field
While they aren’t set in stone as hard rules when it comes to interchanging the terms, they are important to remember for your career field. You’ll always want to make sure you have one of these policies set and ready to go before you take on your first client. Without, you’ll be seen as vulnerable and possibly targeted.
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