What is errors and omissions insurance definition

Your corporation provides financial advice. Advice from one of your employees who is trained as a professional financial advisor leads an individual to lose their life savings. The person seeks compensation from your organization. Bodily Injury. As part of your non-profit organization's teen suicide hotline service, an employee who is a trained psychologist speaks to a teen caller.

Subsequently, the teen commits suicide and the victim's family sues your organization and alleges professional negligence.

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Employee management Hiring Payroll Workers' compensation Workplace safety. Personal Business. A counseling liability refers to any legal liability arising from the provision of counseling services.

Understanding Indemnity Insurance Indemnity insurance is an agreement wherein one party guarantees compensation for losses or damages incurred by another. What Is Professional Liability Insurance? Professional liability insurance protects professionals, such as lawyers and physicians against negligence and other claims initiated by their clients.

Inside Indemnity Indemnity is compensation for damages or loss. When it is used in the legal sense, indemnity may also refer to an exemption from liability for damages. Partner Links.

Related Articles. Liability Insurance. Investopedia is part of the Dotdash publishing family. Your Privacy Rights. To change or withdraw your consent choices for Investopedia. At any time, you can update your settings through the "EU Privacy" link at the bottom of any page. These choices will be signaled globally to our partners and will not affect browsing data. We and our partners process data to: Actively scan device characteristics for identification. You discover that one of your clients — a law firm — has experienced a cyber breach that compromises the confidential records of all their clients spanning almost a decade.

Forensic experts determine that the hacker infiltrated their computer system despite the firewall your employees set up. In addition, they face employment liability due to the loss of employee information, as well as costs to hire experts and replace the computer system.

The problem is that general liability insurance only covers property damage and bodily injury. But in this scenario, there was neither property damage nor bodily injury.

The law firm is hardly alone. Many industries face the risk of their advice harming a client financially. These gaps often occur when professional services harm a client but do not cause bodily injury or property damage. Even those operating in the same industry will see vast differences between insurance carriers.

It targets the exposures that you disclose to the underwriter and is tailor-made to cover those risks. You will notice that some words are in bold and the statement is kind of ambiguous. Those bolded words are terms that are defined in the definitions section of the insurance policy. This helps provide clarification as to what the insuring agreement actually says. For this example, you would look up the definition of "Professional Incident" to know what events are covered. These definitions are found in your insurance policy or quote.

Professional Incident means any error, misstatement, misleading statement, act, omission, neglect, or breach of duty, including Personal Injury , actually or allegedly committed or attempted solely in the rendering of or failure to render Professional Services.