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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