Professional Liability and E&O Insurance
E&O Insurance (Errors and Omissions)
Errors and Omissions Insurance is also known as E&O Insurance, Professional Liability Insurance (PLI) and Professional Indemnity Insurance (PII). The most common of those terminologies is E&O Insurance. E&O Insurance is a type of liability insurance. An E&O insurance policy can be purchased by professional individuals and businesses who provide professional advice and services to others. The policy will help to protect the insured against a negligence claim made by a client, and damages awarded in a civil lawsuit. E&O policies are structured to pay claims, damages and loss from the alleged failure to perform as expected. Performance errors include errors when services are rendered or product is sold by the policyholder. These circumstances for legal action would not be covered under a general liability insurance policy which addresses more direct forms of loss or damage. E&O Insurance can come with different names and terminology depending on the profession which it is covering. E&O insurance is sometimes required under contract by other businesses that are the beneficiaries of the advice or service, and in some instances is required by law for some professions.
Policy coverage structure and terminology varies depending on the profession covered. In some policies there are provisions for defense costs, including when legal action turns out to be groundless. However, the policies do not cover criminal prosecution nor a wide range of potential liabilities under civil law that are unspecified in the policy. These costs may be subject to other forms of insurance.
Considering the complexity of E&O insurance we would advise that you consult a professional business advisor and your attorney to determine the exact policy and coverage that is right for you.
Directors and Officers Liability (D&O)
This liability insurance, often referred to as just D&O Insurance, is liability insurance to cover the insured who suffers a loss because of law suits filed against an organizations’ directors or officers for alleged wrongful acts where their duties within the organization are concerned. Payment or indemnification is paid to the directors and officers of a company, or to the business/organization(s) itself. D&O policies reimburse for loss or make advance payments for the defense costs. Coverage under the policy can extend to defense costs arising out of criminal and regulatory allegations; in fact, civil and criminal actions may brought against directors/officers simultaneously. Intentional illegal acts, however, are typically not covered under D&O policies.