It’s a pretty straightforward fact that anyone who is in the business of giving recommendations or generating programs to customers will have to be covered by some type of insurance. Limited liability may be in place, but that will only cover a certain amount, so in this case coverage from a Carmel company, such as professional liability insurance, will have to be in place. But what if you’ve heard of errors and omissions insurance, or heard the two terms used interchangeably? What’s the difference?
Sometimes professional liability and errors and omissions are spoke about in the same sentence. However, they are not necessarily synonymous. Both are designed to protect professionals like lawyers and doctors, but there is a reason for the differing terminology.
How They’re Alike
Insurance that professionals obtained for their services, like doctors or lawyers mentioned above, was called professional liability. Semi-professional occupations on the other hand would have a similar type insurance known as errors & omissions insurance. But now the two types of insurance are nearly indistinguishable and have converged to mean basically the same thing when it comes to third-party grievances that don’t involve bodily injury or property damage.
How They’re Different
Although they seem to be interchangeable, the two insurance options have some technical differences that make it imperative to distinguish. Professional liability insurance is essentially a larger, more blanketed option of insurance compared to errors and omissions, which is relatively smaller. Several types of insurance fall under the professional liability banner whereas E&O pertains to a particular area including things that a professional did (errors) and things they didn’t do (omissions) when it comes to a previously agreed upon service.
Professional liability covers the cost to defend yourself in court or legal battles if it gets to that point. This will come in handy to guard against wiping out someone’s business or law firm with court costs and fees. Another aspect of professional liability and E&O is that policies are often claims made policies, which means they cover claims filed during the policy.
Profession-specific coverage is available and can be tailored to fit someone’s specific kind of occupation. There’s professional liability insurance for accountants, lawyers, doctors, business professionals that can’t be interchanged between the occupations.
It’s important to know the differences, even though they are few, between the two types of insurance. Get in touch with your local professional liability coverage agent or office to see which is right for you depending on your profession or what you are looking to have covered.