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What is the difference between professional liability (PL) and errors and omissions insurance (E&O)?


Professional liability, PL, errors and omissions insurance, E&O – what’s the difference? It’s a question we get asked a lot.

And you know what? The answer is, there isn’t one.

E&O, errors and omissions, professional liability insurance and PL are all names for the same policy.

And just to make things more confusing, malpractice insurance is a form of the same coverage, too.

What is professional liability insurance (E&O)?

Professional liability insurance protects your business from the cost of claims you did something wrong (made an error) or left something out (made an omission). See what we did there?

It’s a policy you want if you offer professional advice, or a service, to clients. Because if you make a mistake and it costs your client money, they can sue you.

In fact, they can sue you even if you’ve done nothing wrong.

And that really sucks. Because defending your business against claims like these takes time and money – lots of it. When you’ve got better things to do. Like run your business.

What does professional liability insurance (E&O) cover?

Whether you’ve made a mistake or not, professional liability insurance covers:

Claims made worldwide

Nowadays you, or your clients, could be working anywhere in the world. No matter which city, country, or continent you’re working in, a professional liability policy can cover a claim made against you. It just has to be filed in the U.S., a U.S. Territory, or Canada

Claims made for work you did in the past

Job done. Client’s happy and you’ve both moved on (or so you think). But then you find yourself slapped with a suit…

PL insurance can cover claims made over your past work. So long as the claim is made during your policy period.

Your legal defense costs

Legal defense costs can be eye-watering and wallet-wiping. You could be looking at 6 figures if a case goes to court.

Professional liability insurance gets you a specialist attorney, pays your legal fees and court costs. Even if the case is groundless. But if you are at fault, it can take care of the damages, too.

Your temporary staff and contractors

It often makes business sense to outsource work. Or just take on help when you actually need it. But there are risks involved.

You may not have made the ‘mistake’ yourself. It could’ve been one of your temporary staff. Or an independent contractor you used. But you can still be sued.

Luckily a PL policy doesn’t just cover you. It covers temporary staff and any contractors working for you.

Libel or slander

He said, she said. Doesn’t matter who said what. Nobody wants to get sued for slander or libel. Suits like that can seriously damage your reputation. And you can’t put a price on that.

PL insurance covers claims for slander or libel. Even if you, or someone working for you, said nothing at all.

Why are there so many terms for professional liability insurance?

It’s because different industries call it different things.

If you’re in the real estate, tech or accounting industry it’s known as errors and omissions (or E&O for short).

Whereas for architects, consultants and engineers it’s called professional liability insurance (or PL for short).

The reason for this is pretty straightforward. Although it’s essentially the same policy, it’s tailored to fit the needs of each industry. Which, if you think about it, are going to be a bit different to each other.

Is malpractice insurance the same as professional liability insurance?

Malpractice insurance is also a form of professional liability insurance. And it’s what people in the legal or medical profession call it.

But medical malpractice insurance is not the same as professional liability insurance. It covers physical damage done to someone. Not financial or legal damage.

It’s coverage anyone who physically treats people needs. From doctors and nurses, to physiotherapists and estheticians.

But whatever industry you’re in, we can get you the right insurance. Fast.
You can get a quote and buy online now. Just type in your industry, answer a few quick questions and we’ll do the rest.

Or call us at: 978.344.4215. We’re always happy to help.

Image: Creative Commons, Unsplash.

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