Professional Liability E&O Claim Examples
Professional Liability Insurance also known as Errors and Omissions Insurance is important for businesses of all industries to have. Professional liability is different from your general liability policy.
What Your Business Needs to Know
Professional Liability/E&O is insurance coverage for business professionals who provide a service to clients. This insurance will help cover the financial burden for professionals in claims of negligence, errors, omissions of service, misrepresentation, inaccurate advice, and failure to act on good faith.
This insurance will not cover intentional acts, property damage, and bodily injury. Your general liability policy covers property damage and bodily harm.
Professional Liability can help cover legal defense fees, settlements, and judgments. The amount of coverage you can have for your company will depend on your company’s size and policy limits.
Business professionals who may need this policy can include: accountants, physicians, mechanics, insurance professionals, and real estate agents etc. If your business provides any form of service to people, this insurance is vital for your company.
Example E&O Claims
Check out these E&O claim examples courtesy of Burns & Wilcox:
The company was expanding and its owners hired a human resource consultant to create an employee?benefits plan to encourage employee retention. The consultant came up with a plan whose costs were projected to be well within the company’s budget, and it was adopted.
The consultant didn’t anticipate the steep rise in the cost of medical insurance or the dive taken by the stocks that were to be used to offset some of the plan’s costs. When the benefits actually cost the company several times the consultant’s projections, the company sued the consultant for the extra costs.
Two sons had bought out their father’s interest in a clothing manufacturer and hired a business consultant to make it more profitable. The consultant felt pressured to make some dramatic changes, so he recommended a 20 percent cut in staff and a major product?marketing effort, which the owners immediately acted upon.
The improved marketing proved too effective for the slimmer company. A host of large orders were taken, but the remaining workers were unable to fill the orders within the promised time frame. In addition, the business had laid off its inspectors, so defective product was shipped out.
Between the delays and the quality issues, the company got a black eye across the industry and orders stopped coming. Within a year, revenue was down almost 50 percent, and the business consultant was sued for loss of company income from his negligence.
At Allied Insurance Managers, we know how important it is for your company to have additional coverage other than your general liability policy.
If you would like to discuss how we could help your business with a professional liability policy, contact us today.