Professional Liability Insurance  

Also called professional indemnity insurance (PII) but more commonly known as errors & omissions (E&O) in the US, is a form of liability insurance that helps protect professional advice- and service-providing individuals and companies from bearing the full cost of defending against a negligence claim made by a client, and damages awarded in such a civil lawsuit.

The coverage focuses on alleged failure to perform on the part of, financial loss caused by, and error or omission in the service or product sold by the policyholder. These potential causes for legal action are not typically covered by a general liability insurance policy which addresses more direct forms of harm.  Could relate: to construction contracts, bids, or faliure to comply with the terms of an agreed contract.

Professional liability coverage sometimes also provides for the defence costs, including when legal action turns out to be groundless. Coverage does not include criminal prosecution, nor a wide range of potential liabilities under civil law that are not enumerated in the policy, but which may be subject to other forms of insurance. Professional liability insurance is required by law in some areas for certain kinds of professional practice (especially medical and legal), and is also sometimes required under contract by other businesses that are the beneficiaries of the advice or service.

Errors and Ommissions (E&O) Insurance  

Professional liability insurance may take on different forms and names depending on the profession. For example, in reference to medical professions it is called malpractice insurance, while errors and omissions (E&O) insurance is used by consultants, brokers and lawyers. Other professions that commonly purchase professional liability insurance include accounting and financial services, construction and maintenance (general contractors, plumbers, etc., many of whom are also surety bonded), and transport. Some charities and other nonprofits/NGOs are also professional-liability insured.

E&O is most often used by consultants, brokers and agents of various sorts, including notaries public, real estate brokers, insurance agents themselves, appraisers, management consultants information technology service providers, architects and engineers, attorneys, third-party business administrators, quality control specialists, nondestructive testing analysts, and many others.

(there are specific E&O policies for software developers, website developers, etc.) A mistake which causes financial harm to another can occur in almost any transaction in many professions.

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