When choosing your professional liability insurance, also known as Errors and Omissions (E&O insurance), it is as important to understand what isn’t covered by the policy as it is to know what is covered. Being sued for an alleged breach of professional services is bad enough. Add to that the distress you would feel to discover that your insurance does not provide coverage for the act that is the basis of the lawsuit.
There are some events that occur in the workplace that may be covered under one type of policy but are not covered by your E&O insurance, which is designed to protect you from claims of negligence, such as misrepresentation, inaccurate advice, and violation of good faith and fair dealing. Become familiar with your E&O policy to be sure you know what is and what is not covered.
What Is Not Covered by Professional Liability Insurance
Your E&O insurance provides coverage for workplace negligent mistakes and oversights, but there are some events that are not covered. Examples are:
- Intentional conduct. No matter how annoying clients might be, if you intentionally cause them harm, like misplacing the file or refusing to return phone calls, your E&O insurance will not cover the damages claimed.
- General liability claims. Professional Liability insurance does not cover personal injury actions. For example, if a client trips and falls at your workplace, your E&O policy does not cover that claim. This is why you also need a General Liability policy that does cover bodily injury lawsuits
- Employees injured at the workplace. Workplace injuries are covered by Workers’ Compensation insurance, not by Professional Liability insurance.
- Employment disputes. An employment dispute, such as a claim of sexual harassment, wrongful termination, workplace discrimination, and other similar claims, are not covered under your E&O policy. They may be covered under Employment Practices Liability insurance (EPL).
- False advertising. There is no coverage under your E&O policy, or any other policy, that covers false advertising. False advertising includes exaggerating your work experience, claiming you graduated from a prominent school when you did not, and other statements designed to attract clients, but are only hyperbole.
Know the Difference in “Claims Made” and “Occurrence”
Even if the claim against your business is one that would be covered under your E and O insurance, it still may not be covered, depending on the type of Professional Liability policy you have.
- Claims made. This means that the policy must be in effect both at the time the event took place and when a lawsuit was filed.
- Occurrence. A claim is covered if the event occurred during the time a policy was in place even if the policy is no longer in effect at the time the claim is made.
Our agents at Transparity Insurance Services are committed to helping you understand your specific insurance needs. Every business needs the protection of E&O insurance. Contact us and we will be happy to answer your questions.
About Transparity Insurance Services
Transparity Insurance Services was founded for the purpose of helping clients to ensure their property and assets with no hassle. We are committed to providing a simple, easy, efficient, and positive experience to all of our clients, and prioritize open and transparent communication with our clients. Through our excellent customer service and technology, we can help you to find the right insurance program at a competitive price. Contact us today at (855) 889-2037 to learn more about what we can do for you.