What is Professional Liability Insurance?
Professional liability insurance, also known as errors and omissions insurance, or E&O insurance, helps cover you and your company if you are found negligent in the professional services you provided. A customer or client can sue even if you’ve done nothing wrong.
Why do you need Professional Liability Insurance?
In some cases a client may require a businesses to have professional liability insurance as a condition of a contract to do work. Professional liability insurance helps protect you and your company against a claim that professional advice or services you provided caused a client or customer financial harm due to mistakes on your business’s part or because your business failed to perform a service.
Professional Liability Claim Scenario:
A professional staffing firm was hired to provide a client with temporary personnel experienced in data entry. Over the course of several days, the firm sent personnel with the requested experience and the client dismissed almost all of the individuals, contending that they lacked sufficient skills and processing speed. The client terminated the contract early and demanded compensation from the staffing firm for lost revenues, alleging that the failure to provide personnel with the requested qualifications caused the client to miss an important deadline and forfeit a performance bonus.
What does Professional Liability Insurance Cover?
Professional liability insurance covers a negligent act, error or omission. Some professional liability insurance policies include misrepresentation, violation of good faith and fair dealing, inaccurate advice, third party network security and privacy violations.
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