Siskiyou Insurance Services, Inc.

Types of liability insurance

In many professions, liability insurance is a compulsory form of insurance for those at risk of being sued by third parties for negligence. In addition, there are a further range of perils that people insure against and, consequently, the number and range of liability policies has increased in line with the rise of litigation in our court systems.

Specialized liability insurance has been created for professionals who have expertise in a specific area and covers against things like negligence, malpractice or misrepresentation. Depending on the profession, professional liability insurance may have different names, such as medical malpractice insurance for doctors, and errors & omissions insurance for real estate agents and attorneys. Professional liability insurance is a specialty coverage that is not provided under homeowners’ endorsements, in-home business policies or business-owners' policies. It only covers claims made during the policy period.

Three of these specialized types of insurance, E&O, D&O and EPLI, are discussed here.

Errors and Omissions (E&O) insurance, which may exclude negligent acts other than errors and omissions (“mistakes”), is most often used by consultants, brokers and agents of various sorts, including notaries public, real estate brokers, insurance agents, management consultants and information technology service providers. There are specific E&O policies for website developers, architects and engineers, attorneys, appraisers, quality control specialists, and many others. A mistake which causes financial harm to another can occur in almost any transaction in many professions.

Directors and Officers Liability Insurance (often called D & O) is liability insurance to help protect the directors and officers of a company, or the organization itself, as indemnifications for certain damages (losses) or for defense costs in the event they suffer a loss as a result of a legal action brought against them in their capacity as directors and officers or against the organization.

At its roots, D&O insurance insures “behavior” in that the decisions of directors and officers are what often lead to covered claims. That is, an incorrect decision often leads to shareholder discontent and, thus, a lawsuit against the directors and officers who made the decision.

Employment Practices Liability Inaurance (EPLI) Employer Practices Liability Insurance provides companies and employees coverage for claims made against them that happen as a result of wrongful employment practices. Learn More.