Liability Insurance
Professional Indemnity (Errors & Omissions - E&O) Insurance
Professional Indemnity Insurance, also known as Errors & Omissions (E&O) Insurance, is designed to protect professionals and businesses from legal liability arising due to errors, omissions, misstatements, negligence, breach of duty, or failure to perform professional services.
It helps cover legal defense costs, settlements, and compensation in case a client suffers financial loss due to a mistake or perceived failure in service delivery.
This insurance is especially crucial for:
- Consultants
- Lawyers & Legal Advisors
- Doctors & Healthcare Providers
- Engineers & Architects
- Chartered Accountants
- IT Professionals
- Insurance & Finance Advisors
- Media & Creative Professionals
Why is Professional Indemnity (E&O) Insurance Essential?
- Shields Against Costly Lawsuits: Protects from potentially devastating financial losses due to litigation.
- Builds Client Trust & Credibility: Shows clients that you're prepared and accountable for your services.
- Required by Regulatory Authorities: Often mandated by professional bodies and government contracts.
- Protects Business & Personal Assets: Prevents erosion of personal or business wealth from legal payouts.
- Covers a Broad Range of Professions: Tailored coverage for different industries and professions.
Important Things You Should Note
- Claims-made policy: Coverage applies only if the claim is made during the policy period.
- Retroactive date is key: Older mistakes may not be covered unless within the retroactive date.
- Media Liability Insurance can be an extension of E&O Insurance for content creators, publishers, etc.
- Must disclose all past incidents honestly when applying or renewing to avoid claim denial.
What is Covered & What is Not Covered?
What is Covered?
- Professional Errors & Omissions – Mistakes in advice, reports, design, or service leading to client financial loss.
- Negligence & Breach of Duty – Failure to exercise reasonable care while performing professional duties.
- Misrepresentation – Unintended misstatements or misleading information given to clients.
- Legal Costs & Settlements – Covers attorney fees, court expenses, and financial settlements.
- Lost or Breached Confidential Information – Accidental disclosure of sensitive client information.
- Unfulfilled Contractual Obligations – If a client suffers losses due to failure to meet contract terms.
What is Not Covered (Exclusions)?
- Deliberate Wrongdoing or Fraud – Any intentional act of fraud, dishonesty, or criminal activity is not covered.
- Bodily Injury & Property Damage – These are covered under General Liability Insurance, not E&O.
- Employee Claims & Workplace Issues – Discrimination, harassment, or wrongful termination fall under Employment Practices Liability Insurance (EPLI).
- Data Breaches & Cyber Crimes – Requires Cyber Liability Insurance for protection against hacking, malware, and data theft.
- Patent & Intellectual Property Violations – Disputes over trademark, copyright, or patent infringement are not covered.
- False Promises or Guaranteed Results – If a professional guarantees a specific outcome and fails, it is not covered.
Frequently Asked Questions (FAQs)
Who needs Professional Indemnity (E&O) Insurance?
Any professional or business offering advice, consultancy, or specialized services should have E&O Insurance, including lawyers, doctors, engineers, IT professionals, consultants, accountants, and financial advisors.
What is the difference between General Liability and E&O Insurance?
General Liability covers bodily injury & property damage, whereas E&O Insurance covers professional mistakes, negligence, and financial losses.
How much does Professional Indemnity (E&O) Insurance cost?
The premium depends on factors like industry, risk exposure, company size, and past claims history. High-risk professions like financial advisors or doctors may have higher premiums.
Does E&O Insurance cover breach of contract claims?
Yes, it covers losses if a client suffers financial harm due to an unintentional failure to meet contractual obligations.
Does Professional Indemnity (E&O) Insurance cover past errors?
It depends on whether the policy includes retroactive coverage. Claims must be reported while the policy is active, even if the incident occurred earlier.
