4. Why do I need Professional Liability Insurance?
Professional Liability coverage, also known as Errors & Omissions (or E & O) Insurance, protects you against losses that could result from a claim of negligence, errors, or omissions in the performance of your professional services. For example, E & O insurance would protect against claims that a contractor’s installation of flooring led to a trip and fall accident. More generally, Professional Liability Insurance can guard against claims involving loss of client data; system or software failure; and claims of nonperformance, fraud, or negligent oversell.
Even if a lawsuit lacks merit (what’s often called “frivolous”), Professional Liability Insurance covers the legal fees you incur as you defend yourself in court. This makes E & O Insurance a key
element of any insurance portfolio. because errors and omissions claims for computer consultants are considered “low-frequency / high-severity.” This means that few E & O claims are filed in the industry, but those that are tend to be costly.
Some Professional Liability Insurance policies even include coverage for lost income associated with defending yourself against a lawsuit. In other words, you may be able to secure a policy that pays you, should you be unable to work because of the claim.
Investing in Professional Liability Insurance is one way technology professionals can protect themselves from otherwise unwieldy costs of E & O lawsuits.
70% of businesses raise prices or cut hiring when suedSource: www.techinsurance.com