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Professional Liability Coverage (E&O)
Professional Liability Insurance covers
individuals and companies who provide professional services, such as
lawyers and physicians, from losses they incur as a result of being
held responsible for the losses of their clients. This could result
from claims of an error, malpractice, negligence, or mistake
committed or alleged to have been committed by the insured in his
professional capacity.
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California businesses conducting a business that requires
professional liability insurance will typically need these coverages
in place before commencing operation. Coverage will protect personal
assets and will help maintain a good reputation through the defense
of allegations of wrongdoing which might be frivolous or false,
which is an almost certainty doing business in the state of
California. For the client who has suffered some damages through the
actions of a professional, liability insurance will ensure that
there are adequate funds available to make amends for the wrong that
has been done. A professional liability policy covers errors,
omissions or negligent acts which may arise from the normal or usual
duties carried out by the insured.
When the professional is an employee of a firm, the firm, as the
employer, is responsible for the actions of the employee. However, a
court of law may find a professional personally responsible for an
incident that occurred due to an error, omission or negligent act
committed by the professional as an individual, which is why some
professionals such as nurse will purchase a professional liability
policy outside the hospital to provide additional protection.
What is Errors and Omissions Insurance?
Errors and Omissions is part of a professional liability insurance
policy in most cases. This insurance covers damages caused by
mistakes (errors) made by the professional or damages caused by
something the professional failed to do (omissions). No matter what
kind of business you own, customers can claim that something you did
on their behalf was done incorrectly, and that this error cost them
money or caused them harm in some way which is where professional
liability coverage will protect you.
Professional, semi-professional and serviced type of work may place
an obligation on the part of the individual to see that the task is
properly performed. Any error or omission in the performance of a
particular duty may make the individual responsible in damages.
Errors and omissions insurance is designed to protect the individual
in such a situation.
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Important aspects to consider for Professional Liability (E&O)
Coverage
Important aspects to consider when evaluating these policies are
limits and defense. Limits are important as some professional
classes tend to have very few claims but when they do occur they are
very expensive to defend and settle. Two limits are typically
present in these policies, occurrence and aggregate. The per
occurrence amount will be less or equal to the aggregate and will
make up the amount paid out for any one claim. The aggregate is the
most the policy will cover and is usually equal to or 2x greater
than the per occurrence amount. Another extremely important aspect
of professional liability coverage is to determine whether your
defense limits are inside the limits. If so you could be stuck if
you have an expensive defense and subsequently are forced to settle
or loss the case.
Example of defense inside the limits in a Professional Liability
Policy:
Per Occurrence Limit $1,000,000/$2,000,000 Aggregate
Attorney fees = $450,000 Settlement=$700,000
Company will pay
$150,000
Example of defense outside the limits in a Professional Liability
Policy:
Per Occurrence Limit $1,000,000/$2,000,000 Aggregate
Attorney fees = $450,000 Settlement=$700,000
$1,150,000 settlement and fees covered under aggregate limit
Examples of claims:
Get a Errors and Omissions
Insurance quote now - Click Here
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We help our clients reduce expenses while maintaining or improving
their over all insurance coverage.
- Average Reduction in Premium 10-20%
- We work for you
- Reduce time managing insurance programs
- Identify Coverage gaps
- Risk analysis
Contact us
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Why work with Arroyo Insurance Services:
- Arroyo has been in operation since 1986
- Choice - Over 35 A Rated Carriers
- Dedicated account manager
- 4 Hour turn around on certificates
- Loss prevention program
- Workers Comp Claims Management
- Personalized Risk Assessment
- 98% Client Retention rate
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