Florida 2-20 General Lines Agent (Property, Casualty, Commercial Lines and Florida Law)Casualty InsuranceMedium
A Florida architect is designing a new commercial building. Due to an oversight in their calculations, the building's foundation is incorrectly designed, leading to significant structural issues and necessitating costly repairs after construction has begun. Which type of liability insurance would cover the architect's financial loss arising from claims related to this professional error?
- AWorkers' Compensation
- BCommercial General Liability (CGL)
- CProfessional Liability (Errors & Omissions)
- DCommercial Property Insurance
Show answer & explanationAnswer & explanation
Correct answer: C. Professional Liability (Errors & Omissions)
Professional Liability insurance, often called Errors & Omissions (E&O) insurance for non-medical professionals, covers financial losses due to negligent acts, errors, or omissions in the professional services provided by the insured. This directly applies to an architect's design flaw.
Why the other options are wrong
- A. Workers' Compensation covers employee injuries sustained on the job, unrelated to professional errors causing third-party financial loss.
- B. CGL covers bodily injury and property damage arising from premises, operations, products, and completed operations, but generally excludes professional services.
- D. Commercial Property Insurance covers damage to the insured's own property, not liability arising from professional services.
Professional Liability (E&O)
Professional Liability insurance, or Errors and Omissions (E&O), covers financial losses to third parties due to professional negligence, errors, or omissions in services rendered.
- Specific to professional services (e.g., architects, lawyers, consultants).
- Excludes bodily injury and property damage typically covered by CGL.
- Often written on a claims-made basis.
Memory trick: Liability types: 'C.P.W.U.' for 'Commercial, Professional, Workers, Umbrella'.