What are the differences and similarities between Pure Economic Loss and Errors & Omissions?

 

Pure Economic Loss

Errors & Omissions

Similarities

  • Both provide cover for pure economic loss where people were not injured and property was not damaged.
  • Both are limited to losses arising out of negligence.
  • Both exclude losses arising out of products

Differences

  • Covers losses arising in the ordinary course of the Insured’s business activities
  • Covers losses arising out of the Insured’s professional activities

 

  • Excludes losses arising out of work that requires special skill or knowledge
  • Includes losses arising out of work that requires special skill or knowledge

 

Example:  The Insured’s receptionist sprays too much insecticide and as a result the neighbouring businesses need to be evacuated. The neighbours sue the Insured for loss of income during the evacuation.
(The Insured, through negligent wrongdoing, denies the third party an opportunity to earn an income.)

Example: An engineer makes an error in calculating the correct concrete mix resulting in an excessive hardening period. That delay causes a builder to miss his deadline and therefore having to pay penalties. The builder would sue the engineer and the E&O section of the policy would respond to that claim.

Subject: 
General Liability