As a business owner, you know how important it is to secure the right commercial insurance in Los Angeles
. As you discuss your coverage needs with your insurance agent, they may bring up professional liability and/or E&O insurance (errors and omissions insurance). However, what are these coverages, and why do they seem to be discussed interchangeably?
Here's what business owners need to know about professional liability and E&O insurance.
One Coverage, Many Names
First, it's important to understand that professional liability and E&O insurance are the same types of coverage. This coverage can also be referred to as malpractice insurance. The names can be used interchangeably depending on the industry that your business works in. For instance, architects, accountants, and consultants usually use the term professional liability insurance. Real estate and IT professionals tend to call it E&O insurance. Those in the medical and legal sectors refer to the coverage as malpractice insurance.
The Coverage is the Same
Regardless of your industry call, professional liability insurance offers coverage for businesses accused of making costly mistakes by their clients. For instance, a business would access their professional liability insurance if a client holds it liable for breach of contract, work oversight or mistakes, providing substandard or incomplete work, missed deadlines, and so on. Even if there is nothing wrong with your work's quality, a dissatisfied client could still sue your business for a perceived issue. Fortunately, your professional insurance would handle the costs of the claim, including legal fees, court costs, and settlement expenses.
How Errors & Omissions Insurance or Professional Liability Insurance Protects You?
You can choose from two types of coverage:
- Occurrence Coverage – Though this policy may cost you more, it will protect you even if the lawsuit occurs after your coverage has lapsed, provided the damage happened when your coverage was active.
- Claims-Made Coverage – To be covered for the liability issues, you need to have your policy in effect when the damage happened, and the lawsuit was filed.
Who Needs E&O & Professional Liability Insurance?
Businesses that buy this coverage often include:
- Interior decorators
- Advertising agencies
- Business consultants
- Tax preparers
- Software, hardware, and electronics manufacturing businesses
- Travel agents
- Graphic designers
- Medical providers
- Attorneys and legal service providers
- Real estate professionals
- Financial service professionals
You can also consider buying this coverage if your business works with:
- General contractors
What Is Covered by E&O or Professional Liability Insurance?
This policy covers:
- Personal injury claims like libel and slander
- Mistakes made by temporary staff and contractors
- Violation of good faith and fair dealing
- Inaccurate advice
If your business faces a lawsuit for these damages and mistakes, your professional liability insurance will pay for:
- Damages resulting from the lawsuit, including judgment and settlement fees
- Defense costs such as attorney and other court-related fees
- Disciplinary proceedings called by a government agency
- Loss of earnings resulting from the time you spend at depositions and trials
- Subpoena assistance if you are a witness in a lawsuit
Why This Coverage Matters
The obvious benefit of professional liability insurance is that it helps you cover the cost of expensive claims. However, having this type of insurance can also help you be more competitive. Because many clients require companies to carry this coverage before hiring them, already having professional liability protection will increase the chances of earning their business.
This is what you need to know about professional liability and E&O insurance. Do you have additional questions about your commercial insurance in Los Angeles
? If so, then contact the experts at Fuller Insurance Agency in Southern California. We are ready to get you the coverage that you need today.