Business owners working within the warehousing industry might find themselves offering services to their clients not generally covered under other policies. Coverage for these services can only be found under a professional liability policy. Logistics Management Errors & Omissions Liability Insurance, or E&O for logistics professionals, is designed to cover those exposures that fall outside the general liability policy.
A general liability policy usually contains some type of professional liability exclusion. Specifically, the insurance carrier will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury or property damage”.
Therefore, if there is no bodily injury or property damage, but a customer experiences some type of an economic loss and blames it on the someone responsible for the safe transit of their goods, then this type of loss would not be covered since it does not fall within the coverage definition.
E&O covers claims of a “wrongful act”
The policy will pay, on behalf of the insured, those amounts in excess of the deductible that the insured becomes legally obligated to pay as damages from claims as a result of any wrongful act. Any person who is qualified to perform as a Consolidator, Customs Broker, or Freight Forwarder can be covered under such a policy, or the policy can be endorsed with special wording regarding other services related to supply chain management.
Professional liability insurance is designed to protect the individual or company whenever a mistake is made, or when a client perceives this to be a fact. E&O policies will cover judgments, settlements, and defense costs even when a claim proves to be baseless. The amount of money a small business would spend to defend even a groundless lawsuit could cost upwards of tens of thousands of dollars, resulting in bankruptcy, or will at least have a huge impact on any financial bottom line.
Logistics professionals provide a service to a client for a fee and should have E&O insurance protection. The policy form is a “claims made” policy. Claims must occur within the period and reported no later than 60 days after the policy period unless it is agreed upon by the insurance carrier that an extended policy period exists. The logistics professionals E&O liability policy will provide coverage when an unfortunate incident does occur.