Property & Casualty Insurance Exam (National Portion)Types of PoliciesMedium
A client is concerned about potential lawsuits arising from errors or omissions in the professional advice they provide. They operate a consulting firm. Which type of policy would directly address this specific concern?
- AProfessional Liability Policy.
- BCommercial General Liability (CGL) Policy.
- CWorkers' Compensation Policy.
- DBusinessowners Policy (BOP).
Show answer & explanationAnswer & explanation
Correct answer: A. Professional Liability Policy.
Professional Liability policies, also known as Errors & Omissions (E&O) insurance, are specifically designed to protect professionals from claims alleging negligence, errors, or omissions in their professional services or advice. A CGL policy covers bodily injury and property damage, but typically excludes professional liability.
Why the other options are wrong
- B. CGL policies cover bodily injury and property damage, but generally exclude claims arising from professional errors or omissions.
- C. Workers' Compensation covers employee injuries and illnesses, not professional negligence claims.
- D. A BOP combines property and general liability, but does not typically include professional liability coverage.
Professional Liability Insurance (E&O)
Coverage protecting professionals (e.g., consultants, doctors, lawyers) against claims alleging negligence, errors, or omissions in the performance of their professional duties.
- Also known as Errors & Omissions (E&O) insurance.
- Differs from CGL, which covers bodily injury and property damage.
- Customized for specific professions due to unique risks.
Memory trick: Bodily injury, property damage, professional errors, or employee harm? Each needs its own shield.