Errors and Omissions Liability Insurance 101 You might have bought a traditional business owners or general liability insurance policy that may cover losses related to bodily injury, property damage, personally injury and even advertising injury. However, what happens when you or your employees provide a service that a client claim is inadequate or negligent or damaging. For example, if you are a real estate agent, you may find yourself facing a lawsuit if your client finds defects in the property after closing the deal and accuses you of concealing the defects. Here is another example – You may face damage compensation charges when a plumbing repair, that your employee had attended to, fails and causes an entire office to be flooded. Issues like these cannot be resolved by a traditional general liability insurance policy, and this is where professional liability or errors and omissions (E&O) insurance comes in. What is E&O insurance? E&O insurance is a professional liability insurance or professional indemnity insurance that protects companies and their workers, or professionals, against claims if a client sues for negligent acts, errors or omissions committed during business activities that results in a financial loss. Common claims that professional liability insurance covers are negligence, misrepresentation, violation of good faith and fair dealing, and inaccurate advice. E&O policies are generally set up based on a claims-made basis, meaning that the policy covers only those claims made during the policy period.
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