PROFESSIONAL LIABILITY
A Closer Look At Professional Liability Insurance
We often think of Professional Liability , or Errors and Omissions ( E & O ), insurance as just for traditional professionals — doctors , lawyers , engineers , or accountants . But E & O is important coverage for a range of industries , including information technology , software development , and construction .
E & O fills the gaps in coverage often found in Commercial General Liability ( CGL ) policies . Most CGL policies will exclude claims related to the insured ’ s “ professional services .” Also , the CGL responds to claims of Bodily Injury or Property Damage ; E & O policies will respond to claims alleging a pure financial loss .
For example , let ’ s say your product promises to route calls more efficiently for your client , but due to a software issue , it begins to drop calls , resulting in lost customers or sales for your client . Because this scenario involves only a purely economic loss and not bodily injury or property damage , the CGL would not respond but an E & O policy could .
As the use of Computer-Aided Design ( CAD ) has grown in construction , contractors may be more and more involved in the design elements of a project . This takes them beyond their more traditional role of installing or building the project by traditional “ means and methods ” of construction according to the design of an engineer or architect .
In these situations , the contractor ’ s insurance agent needs to evaluate the potential exposure to a claim and whether E & O coverage is needed .
Once the need for E & O is determined , the next step is finding the appropriate E & O policy . Since these policies are written on “ proprietary forms ” specific to each insurance company , there can be important coverage differences between policies based on their Exclusions and Definitions of Terms .
For example , Marcotte recently provided a Coverage review for a prospective client who owned a number of paycheck advance locations . Their insurance policy contained an “ Endorsement ” that excluded any claims related to “ Financial
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