And why it’s important
A professional is someone whose vocation or occupation requires special training and skill. Historically, lawyers, accountants, architects, engineers, and medical professionals were the sole occupations that fell into this category as their industries established strict regulation requirements and codes of conduct. In order to practice in these fields, it was necessary to undergo formal training and pass a state licensing exam to be provided with credentials. The first Professional Liability Insurance policies, also known as Errors and Omissions coverage, were devoted exclusively to this elite group.
Gradually, other types of professionals requiring Professional Liability Insurance (Errors and Omissions Insurance) such as real estate agents, business consultants, social services counselors, educators, and computer technology professionals, began to emerge. While these other classes are often referred to as quasi-professionals under the eyes of the law, they have already developed their own industry regulations for education, testing, and accreditation.
Protection for current classes of professionals
Miscellaneous Professional Liability insurance policies have been developed to address many of the litigation concerns of these new classes of professionals, including computer information technology professionals.
Professional Liability insurance provides protection against certain types of lawsuits arising out of negligent acts, errors, or omissions committed during business activities and that result primarily in economic damages that are not related to bodily injury, property damage, personal injury, or advertising injury.
Why Professional Liability insurance is important
It is important to understand that a Professional Liability insurance policy is meant to dovetail with a General Liability policy and can be managed in different ways, such as with the Virtual Insurance Service for mainly insurance companies. The General Liability policy covers lawsuits alleging bodily injury, property damage, personal injury, and advertising injury. As a result, these types of injuries are not covered by a Professional Liability insurance policy.
Professional Liability insurance is important because it fills a glaring gap in the General Lorry Insurance policy, which has a professional services exclusion that takes away coverage for lawsuits resulting from services rendered or failure to render professional services. Professional Liability insurance policies are meant to respond to lawsuits alleging only economic damages where the client has lost money as a result of a negligent act, error, or omission in the performance of the professional services.The definition of Errors and Omissions insurance can vary per policy form.
A good Professional Liability insurance policy is necessary to safeguard the assets of any company that provides professional services.