Posted in Brokerage
Author: Travis Lankerd
The world of risks around us is ever-changing, as is the insurance industry in order to better combat issues of exposures and risk for personal and commercial lines clients alike. In an industry that rapidly evolves with the times, it is natural to find that new product offerings may appear in marketplace or existing coverages may be tailored to better fit the needs of policyholders.
A side-effect of this rapid evolution is the development of new terms relating to coverages and policy forms within the market. With thousands of different carriers in both the E&S and standard market, it is a guarantee that some carriers may use a different phrasing or terms to describe similar coverages or enhancements that are offered by other carriers via pseudonyms. Being that I work exclusively with Professional Lines, the most common question that I am asked relating to this quandary is:
What’s the difference between Professional Liability and E&O?
The short answer is that – on a macro level – there is not a true difference between the two. The scope of Professional Liability and E&O coverage alike is to indemnify third parties for damages arising out of the insured’s performance of and/or failure to render professional services. However, if we dip into the micro level, the differences mainly lie within each individual carrier’s preference regarding how they wish to refer to their Professional Lines product offerings.
Often, in my own experience, carriers will reference this coverage as ‘Professional Liability’ for their coverage offerings targeted towards Traditional Professions. Accountants, Architects & Engineers, and Lawyers are among several traditional professions that are synonymous with a significant number of carrier’s ‘Professional Liability offerings. With that being said, the high degree of variability within carrier preference and opinion would lead some to argue that Consultants should fall into the traditional professions category. While Accountants may fall into the Emerging Professions category, thus flip-flopping whether the Professional Lines coverage for these professions should be ‘E&O’ or ‘Professional Liability.’ This argument can be made from both ends, Insurance Agents 'E&O' vs. Insurance Agents 'Professional Liability', as well.
Emerging Professions are typically offered ‘E&O’ by carriers. This grouping of professions includes Information Technology, Real Estate, and various Consultants/Miscellaneous Professional Services. Once again, there will always be a degree of variability depending on the carrier that is offering the coverage with regards to what they decide to name the product as it relates to the profession.
Whether it be an Emerging Profession or a Traditional Profession, carrying Professional Liability or E&O coverage is essential to the financial security and risk management practices of all professional service providers. The sure-fire way to ensure that the coverage is adequate and eliminate any confusion, no matter what the carrier names the coverage, is to review the policy’s forms and endorsements with your licensed insurance professional.