Even though the insurance terms “professional liability” and “errors and omissions” are often used interchangeably, there are subtle and important differences that you need to know about. Overall, both policies cover mistakes and errors made with customers by you or your employees. The pivotal distinction of coverage comes down to what trade you’re in.
Here’s an example: A professional liability policy is commonly purchased by estheticians, who could potentially make mistakes when treating a client’s skin. For instance, if they apply a chemical peel to a client’s face and it causes an adverse reaction, such as a rash or burning of the skin, professional liability insurance would help cover the costs of any legal claims filed against the esthetician.
On the other hand, errors and omissions (E&O) coverage is more commonly purchased by accountants and business consultants, as they provide more guidance-based services. For example, if you’re a tax preparer and you inadvertently submit the wrong tax form for your client, they could sue you if they get audited by the IRS as a result of your mistake. In this case, an E&O policy could cover your legal costs. These trades can also get professional liability, which has the same coverage as E&O.
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*Harborway Insurance policies are underwritten by Spinnaker Insurance Company and reinsured by Munich Re, an A+ (Superior) rated insurance carrier by AM Best. Harborway Insurance is a brand name of Harborway Insurance Agency, LLC, a licensed insurance producer in all 50 states and the District of Columbia. California license #6004217.