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Professional liability insurance, also known as Errors and Omissions Insurance or E&O Insurance, insures a person and/or an entity against claims made by third parties (clients, patients, customers, etc.), alleging negligence in the rendering of, or the failure to render, professional services.
Exactly what constitutes negligence is difficult to define, however, loosely defined negligence refers to the failure to provide the degree of knowledge, care or skill of the average professional peer in good standing, under similar circumstances. Essentially, any person or any business that claims to be expert in a particular field can be held responsible for work, advice or counsel.
Historically, professional liability insurance was designed for a core group of professionals including doctors, lawyers, CPA’s, architects and engineers. These are professions that require an advanced academic degree, licensing, etc. In recent years, however, the scope of professional liability coverage has broadened significantly, and now includes such professions such as allied healthcare, mental health or substance abuse counselors, business managers, marketing or technology consultants, software designers, public relations professionals and environmental consultants. Just about anyone who claims to be an expert in any field and is then compensated for his/her expertise, can be held liable in the event that things don’t turn out as they should.
The insurance industry has responded to this issue by expanding its professional liability capacity to embrace many of the newer classes of professionals. Some policy forms are tailored to a single profession. Others insure the acts of the professional by describing them in a space on the policy declaration page or in an endorsement.
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