& Omissions (E & O) insurance covers businesses
for errors and omissions or negligent acts committed
in the course of providing advice, expertise, or other
services to your customers. Such a policy can be purchased
for a wide range of business.
Businessmen assume that they are insured for their misdeeds
by the Comprehensive General Liability (CGL) policies
that cover their business - their assumption is incorrect!
CGL policies do not cover related claims to professional
services that a business provides; indeed CGL policies
almost always exclude coverage for claims related to
the rendering of such services. E & O policies
pick up where CGL policies leave off, while most CGL
policies exclude liability for 'professional services'
from their scope of coverage - most E & O policies
are defined to cover only errors and omissions committed
during the provision of 'professional service'.
interpretation of 'professional services' as it is applied
to the coverage disputes and distinguishes between the
professional and non-professional services by the nature
of the act in question, not the nature of the underlying
activity or the person performing it.
Term "Professional" act or service is
one arising out of calling, occupation or employment
involving specialized knowledge or labour, or skill
involved is predominantly mentally and intellectual,
rather than physical or manual. In determining whether
an act is professional nature or professional service,
one must look at act itself and not the party performing
can happen either by employer, employee or contractors
hired by your company. Remember you can't be everywhere
every time. Everyone makes mistakes at one time or another.
& Omissions insurance will cover losses and
legal expenses resulting from client lawsuits claiming
that you made errors or acted negligently in the performance
of your professional duties. E & O can also be used
to fight slander, libel and breach of contract. Also
damages from the company's improper performance, extra
contractual damages, damages due to alleged breach of
duty of good faith, defense and investigative expenses
and punitive damages.
& O provide safeguard coverage from a catastrophic
loss in the event of a lawsuit, covering both legal
expenses and judgments against you up to the policy
limits. Even baseless claims against your business can
require a legal defense cost that could bankrupt your