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Errors and Omissions vs. Professional Liability vs. Malpractice: What's the Difference Anyway?

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By Next Insurance Staff
Mar 20, 2019 min read
If you're looking into your insurance options, you may have run across these terms: Errors and Omissions Insurance, Professional Liability Insurance, and Malpractice Insurance. As a business owner, you have probably wondered-is Professional Liability the same as Error and Omissions? And is E&O the same as Professional Liability? If you aren't sure what these terms mean, let alone the difference between them, we are here to help! For starters, did you know that all three terms are actually referring to the same policy? Let's break down the basics of the different terms for professional liability insurance so you can set your business up for worry-free growth and success.

What Is Professional Liability Insurance?

On a basic level, Professional Liability Insurance covers you when you are accused of not having done your job correctly. Renovating a house? A small error in your measurements could cost your customer a lot of money farther down the line if your mismeasuring causes damage. Running an in-home daycare? It would be very easy to overlook a child's speech impediment, which could later become a lawsuit for negligence. That's where your Professional Liability insurance policy comes in.

Why Are There So Many Terms for Professional Liability Insurance?

The reason there are so many terms for Professional Liability insurance is that each industry and business is unique. There are many types of professional mistakes which need to be covered by their industry-specific professional liability policy. These different terms are used to describe the type of PL coverage you'll need, even though they can be used interchangeably in the real world: Errors and Omissions Insurance (E&O)  is used to describe the policy covering real estate, tech, and accounting professionals. Q: So, is Errors and Omissions Insurance the same as Professional Liability Insurance?  A: Yes. The label that is used for the policy by real estate, tech, and accounting professionals is the only difference between Error and Omissions and Professional Liability Insurance.  Professional Liability Insurance (PL) is the term used to describe the policy covering consultants, engineers and architects. Q: Is Professional Liability Insurance the same as E&O?  A: It sure is. The label given to the policy covering consultants, engineers, and architects is the only difference between Professional Liability and E&O. Malpractice Insurance is used to describe the policy covering professionals in the medical and legal industries, like doctors and lawyers. Q: Is Professional Liability Insurance the same as Malpractice Insurance? A: Malpractice Insurance is a type of PL Insurance, but PL Insurance is not necessarily Malpractice Insurance.  Doctors and lawyers use the term Malpractice Insurance for their industry-specific PL policy.

How Can I Find The PL Insurance That's Right For My Business?

In all service industries, there are ways to cost your customers time and money by messing up. In 2006, a court's ruling in a contract dispute between two Canadian service providers over the placement of a single comma ended up costing one of the service providers $1,000,000! By taking a closer look at the services you provide, you'll start to see what you'll need to be covered. Sometimes, mistakes are made through no fault of your own, but you're still legally responsible. Here is a great example:  Juan and Marie opened a business together building E-commerce websites on the Shopify platform. They planned ahead from day one by protecting their systems with extra cybersecurity and getting covered with the right Professional Liability Insurance policy for IT providers. One day, the unthinkable happened. Despite the steps they'd taken to avoid it, their computer system was hacked. Overnight, their customers' funds disappeared, and their data was compromised. Several customers sued the business partners for negligence. Thanks to their good business practices, Juan and Marie were able to prove in court that they'd taken steps to avoid the breach in advance. They won their case, and their P&L policy recovered both their legal fees and their customers' lost funds.

How We Can Help

We are all human, and we make mistakes sometimes. With P&L Insurance, it's possible to arm your business in advance.  At Next Insurance, we are here to help you be all that you can be in business, risk-free. This means that your Professional Liability Insurance should be simple, affordable, and tailored to your industry and the professional mistakes that might occur. That’s why with us, you can:
  • Buy your policy 100% online in minutes, whenever and wherever you choose, with 1-click cancellation.
  • Pay monthly, with amazing prices and absolutely no extra fees.
  • Customize your coverage to meet your unique needs as a contractor.
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By Next Insurance Staff
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