Errors and Omissions Liability Types

E & O insurance, Errors & Omissions insurance, Malpractice insurance, Technology insurance, are all types of professional liability policies. Professional liability policies come into play when any business is providing professional services that are beyond and above the norm for a particular industry or business practice. Providing technical or unique functions that require a license, special training or membership within a profession usually describes professional services versus normal services. Nowadays there’s a blurred line for what is professional services as many industries have a consulting, advisory component to their products and services.

All negligent claims in United States require that four basic elements be met before there is a legitimate negligent claim. That doesn’t mean that somebody can’t sue and bring a lawsuit but in order to prevail in their claim all four elements must usually be met in a court of law.

• The first element is that there must be some sort of legal duty that is owed to a person or entity.
• Secondly, there must be a breach of that duty that was owed.
• Thirdly, there must be some sort of injury or damage that is suffered by the person or entity that was owed the duty.
• Finally, there must be causality that the breach of the duty was the proximate cause of the damage or injury.

If there is no legal duty that is owed then there is no negligence claim by law and the case is usually dismissed. If somebody says that they promised to do something and that type of promise by law is required to be in writing and it is not then there is no legal duty that is owed. Another example would be if somebody promises to do a transaction that is illegal by its nature that is not a legal duty that is owed.

If there is no breach of that duty, legal duty, then there is no negligent claim. If the contract is not finished or the terms have not been completed there is a possibly of a breach.

The third element, if there has been a legal duty that is owed and there has been a breach of that duty but if there is no injury or damage the chances are the negligent claim will not succeed in court.

Finally that has to be causality, a connection. The breach of the duty has to be the approximate cause of the damage or injury or again there is no negligent claim. Professional liability protects the insured from claims and losses that are alleged due to an error or omission of professional services. Typically we think of doctors and physicians, accountants, engineers, and attorneys as needing professional liability insurance. Real estate agents, insurance agents, title insurance agents, inspectors, real estate property appraisers, construction management companies, professional property managers, etc. can all have professional liability exposures.

The general liability policy excludes professional services for almost all types of businesses. Businesses that offer professional services as part of their marketing strategy needs to include professional liability coverage as part of their insurance portfolio. Not all professional liability policies and insurance carriers are the same. It is important to seek out a professional liability policy that is tailor-made to your specific industry. A doctor’s malpractice policy is not going to suffice for a structural engineer and the exposures that he or she has. Including professional liability coverage should be a part of your risk management strategies for almost all service industries.

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