Professional liability insurance is more commonly known as malpractice insurance, errors & omissions or E&O insurance. This type of coverage helps protect professional service individuals and companies’ professional advice from the costs associated with mounting a legal defense against a potential professional malpractice lawsuit. Professional malpractice lawsuits allege that the negligence on the part of a professional corporation or individuals working on behalf of that corporation caused unrecompensable financial harm to their business or personal finances.
Professions that commonly purchase professional liability insurance include publishing, advertising, accounting and financial services, construction and maintenance.
Here is an Example of a Professional Liability Claim:
A software developer writes a program that fails to perform properly. The failure of this software causes financial losses which can be attributed to the software developer’s code errors. The company that contracted for the development of the software files suit seeking financial restitution.