E&O vs. Professional Liability Insurance vs. Medical Malpractice: What’s the Difference

Insurance is a complicated subject. There are many different types that meet the needs of specific industries. One common question among medical professionals is what is the difference between errors and omissions insurance and medical malpractice.

Here is a look at the different types of insurance available.

E&O: An Umbrella Term

The phrase errors and omissions refers to all types of medical malpractice insurance. Various types of industries that require this type of insurance have coverage by different names.

For example, malpractice insurance is necessary for doctors, dentists, and many other medical practitioners who deal directly with patients. But on the other hand, professional liability is what covers people in other professionals who give advice and services to clients, like lawyers, accountants, architects and engineers.

Liability issues happen in industries of all types. Stock brokers get sued for pushing a specific stock to clients, who buy and then watch it lose its value when the market goes down. So they sue the broker.

Architects are at risk when a house they design starts falling apart and injuring one of the residents. An accountant can get sued for miscalculating a client’s taxes. If he then gets fined by the government, he passes his frustration and the fine plus damages on to the accountant via a lawsuit.

The Same Purpose

All liability insurance has the same objective: to keep a business in operation, able to weather the impact of a major mistake that causes harm to a client. These situations often result in a lawsuit.

If you are in a profession that provides advice to clients or provides a service, they can hold you responsible if something goes wrong. They can also sue if what you delivered did not meet their expectations.

Error and omission insurance is any policy that covers a mistake on your part, or a wrongful act attributable to your company. If it causes physical problems or financial harm to that person or to a company, you are liable.

E&O insurance policies cover these items:

  • Defense costs if it goes to court
  • Out of court settlements or any damage that is awarded to the person who complains
  • An allowance paid to you for each day you are in the courtroom

Liability insurance goes by a number of names and the factors that influence who gets what are complex. But what is clear is that every professional and every business needs adequate professional liability insurance.