Professional Liability Insurance (also known as “Errors and Omissions”) is a form of Liability Insurance which provides companies the full cost of defending against negligence claims made by clients. It also covers damages awarded in a civil lawsuit.
Professional Liability Insurance Types:
Types of Businesses that need Professional Liability:
Example 1: A Property Manager is hired by a Commercial Business owner to manage their property. There was an ongoing leak in the roof that caused severe damage. The Building owner was sued for damaged property of the tenants. The Building owner then sued the Property Manager for negligence for failing to maintain the roof and to repair the leaks in a timely manner. Damages sought included loss lease income since the tenants terminated their lease agreements. The resolution concluded with the case settling for more than $200,000. The Property Manager incurred defense cost which surpassed $50,000.
Example 2: A retail store owner contracted with a local printer to print flyers for an upcoming sale event. The delivery of the flyers was to be 10 days prior to the event. The printed was late by 3 days and because of this delay, the retail owner was unable to get the flyers into the weekly journal in time. The retail owner sued the printer for negligent mis representation and breach of contract, seeking compensatory damages for lost revenue. The resolution concluded with the case settling for nearly $50,000. The printer incurred defense cost of almost $15,000.
A “Claims-Made Policy” is defined as a policy providing coverage that is triggered when a claim is made against the insured during a policy period, regardless of when the wrongful act that gave rise to the claim took place. This type of policy is most likely to be purchased when there is a delay between when claims are filed and when they occur. Claims made after a policy is terminated will not be covered, even if the alleged event occurred while the policy was in force.
The Most Common policies that are Claims-Made:
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