Errors and Omissions Insurance vs Professional Liability Insurance: What Are the Key Differences?
Business owners purchase insurance to cover profound liabilities that often lead to lawsuits and serious financial losses.
The right liability insurance depends on what type of services the business owner provides.
Companies choose either errors and omissions insurance or professional liability insurance depending on the company’s classifications and the services offered to clients.
Business owners who are confused by the policies review the key differences between the two policies.
What Does Professional Liability Insurance Cover?
Professional liability insurance coverage provides assistance when a professional is accused of wrongdoing. For example, a doctor that is accused of causing a patient’s injuries faces a medical malpractice lawsuit. Under the circumstances, it has been proven that the doctor caused the injuries, it is just suspected.
Professional liability coverage offers funds to settle the matter out of court and prevent the doctor’s credibility from becoming ruined in the medical industry.
Attorneys who provide legal advice that is followed incorrectly or might have lead to injuries either physical or financial face a lawsuit, too.
Once it is released to the media, the attorney’s credibility is threatened, and clients are less likely to hire the attorney for future cases. When facing the potential damage to their reputation, the attorney seeks assistance through professional liability coverage.
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What Do Errors and Omissions Insurance Cover?
Errors and omissions insurance coverage conditions that were caused by a business and have been proven. For example, if the business is in breach of contract for failing to complete a project correctly, the business is liable for the customer’s dissatisfaction or any property damage that resulted from the failure.
Workers that caused property damage while performing services require coverage under the policy to rectify the situation and prevent the customer from filing a lawsuit.
Businesses that use errors and omissions aren’t classified as professionals in the same way as attorneys or doctors.
The business has a standard business license, and the owner didn’t have to complete a degree program, take an exam for a professional license, or renew a license at regular intervals.
A good example of this is insurance for architects error. If they would happen to miss something in their plans like an unforeseen circumstance they would need errors and omissions insurance to cover this.
The business is classified as semi-professional since no one is required by law to have a professional license.
Who Needs the Policies?
Professional liability insurance covers professionals, such as consultants, attorneys, real estate agents, financial advisors, engineers, architects, and doctors. Insurance agents and accountants also choose the coverage as it offers more profound coverage if a liability emerges.
Companies that are classified as semi-professional choose errors and omissions coverage to protect against liabilities they created. The businesses include but aren’t limited to construction contractors, builders, retailers, and cleaning services.
Business owners purchase insurance coverage according to profound liabilities that emerge while performing services. Professional liability coverage is a must for anyone who performs professional services that require a state license to perform the services, such as doctors or attorneys.
Errors and omissions insurance covers liabilities that occur due to a failure to complete services as expected by the client. Purchasing the right policies provide maximized coverage for the business owners.
Are you considering errors and omissions insurance or professional liability insurance?
