E&O insurance protects producers from liability arising from professional services but does not shield willful misconduct. Which statement is true?

E&O insurance protects producers from liability arising from professional services but does not shield willful misconduct. Which statement is true?

• A. It covers willful misconduct
• B. It does not cover willful misconduct
• C. It covers all acts including fraud
• D. It covers punitive damages only

Answer: (B)

Errors & Omissions insurance covers liability for mistakes, errors, or omissions in the professional services you provide, but it does not insure intentional wrongdoing. Willful misconduct means you knowingly engaged in harmful or fraudulent behavior on purpose. Since the policy is designed to protect against negligence, not deliberate harm, willful misconduct is excluded. That’s why the statement that it does not cover willful misconduct is true. The policy may defend and pay for claims arising from honest mistakes or negligence, but it won’t insure fraud, intentional acts, or punitive damages that result from those acts.

Errors & Omissions insurance covers liability for mistakes, errors, or omissions in the professional services you provide, but it does not insure intentional wrongdoing. Willful misconduct means you knowingly engaged in harmful or fraudulent behavior on purpose. Since the policy is designed to protect against negligence, not deliberate harm, willful misconduct is excluded. That’s why the statement that it does not cover willful misconduct is true. The policy may defend and pay for claims arising from honest mistakes or negligence, but it won’t insure fraud, intentional acts, or punitive damages that result from those acts.