Professional Liability: Practice Questions & Explanations

Professional Liability — also called Errors and Omissions (E&O) or Malpractice depending on the profession — protects professionals against claims that negligent performance of their services caused financial loss to a client. Common professions covered: medical professionals (medical malpractice), lawyers (legal malpractice), accountants (accountants E&O), real estate agents, insurance producers, architects and engineers, IT consultants, financial advisors. CGL excludes professional services liability, so professionals need separate E&O coverage. Most professional liability policies are claims-made (triggered when the claim is filed, not when the negligent act occurred), with retroactive dates and tail coverage requirements. Premiums vary widely by profession — surgeons and OB/GYNs pay much more than primary care physicians; trial attorneys pay more than transactional attorneys. Coverage limits typically include defense costs (which can be enormous in professional liability claims).

PROFESSIONAL LIABILITY (Errors & Omissions / E&O): Covers claims arising from the insured's PROFESSIONAL SERVICES — alleged ERRORS, OMISSIONS, NEGLIGENCE, or FAILURE TO PERFORM professional duties to the expected standard.

Examples: An accountant makes an error causing a client financial loss; an insurance agent fails to obtain proper coverage; a consultant gives faulty advice; a real estate agent's error harms a client.

Malpractice: Medical malpractice is professional liability for healthcare providers; vs GENERAL LIABILITY: CGL covers bodily injury/property damage (slips, falls, accidents); E&O/professional liability covers FINANCIAL HARM from professional mistakes (not bodily injury); usually CLAIMS-MADE policies (note retroactive dates and tail coverage); REQUIRED/RECOMMENDED for: professionals whose advice/services could cause clients financial harm; professional liability/E&O is a distinct casualty line covering the financial consequences of professional errors — important exam content distinguishing it from general liability (which covers bodily injury and property damage rather than professional mistakes).