Examples of Professional Liability (E&O) Claims

Professional Liability Insurance is also known as Errors & Omissions, or E&O, and it provides coverage for claims alleging error or negligence on your part which has resulted in a financial loss for the claimant.

Does your business need Professional Liability (Errors & Omissions) Insurance? Probably.

Is Professional Liability insurance better suited for companies with millions in revenue? If you are a small business, I would argue that you have more of a need for coverage than a million dollar company because you have more to lose. To help you decide, here is a list of example losses for a variety of professions.

Accountants and Financial Advisors

After years of providing monthly bookkeeping services for a client, it is determined that they had an employee who had been embezzling. Your client claims that had you performed your responsibilities correctly, this would have been identified much sooner and the loss would have been much less.

Architects and Engineers

The client claims that you failed to create blueprints that accommodated current building codes and as a result, the client has incurred financial penalties for violations as well as the cost to fix the construction.

Auctioneers

A consignor claims that because the auctioneer did not have the auction within the time frame that was contracted, they are out thousands of dollars due to not being able to sell the house the items were in.

Contractors

The client claims that due to the poor work quality of the subcontractor you hired to replace their roof, they have sustained expensive damages to the interior of their house.

Real Estate Professionals

The buyer claims that you did not disclose zoning restrictions that prevent them from using their property in the manner that they intended.

Security Professionals

The client files a claim that your security professionals failed to patrol the property as frequently as they were contracted to and as a result a break-in occurred resulting in the loss of inventory, vandalism, and property damage.

Technology Professionals

You have a client that claims that they had a data breach due their security software not being updated in a timely and regular manner.

Tire Dealers

A client claims that you misrepresented the quality of specifications of a tire and because of this, the tire failed and there were resulting damages to the vehicle and passengers.

Welders

The client claims that the wrong type of material, or filler, was used which resulted in a compromised structure and the client incurred financial damages due to the required repairs.

Conclusion

Notice that with each scenario, it is claimed that your work is responsible for the financial loss. Professional Liability claims are not frequent, but they are expensive because attorneys are involved and frequently a trial will decide the responsibility. Whether you are responsible or not, the Professional Liability policy will pay for your defense in the claim.