Insurance Carriers, Etc.
An insurance carrier is a company issuing and assuming the risk involved in issuing an insurance policy. One form of insurance that such companies offer is that of errors and omissions coverage. Often, a policyholder may be sued for acts of alleged errors and ommission which can arise out of financial and insurance services provided by them to their customers.
These customers can sue the policyholder for loss control, financial advice, asset management and more. In order to protect themselves, engineers and architects look to an insurance carrier that offers coverage for errors and commission cases.
So, in case a claim is made against the policyholder, the insurance carrier will have to defend as well as indemnify the policyholder. The first part or defending the policyholder begins when the latter sends to the former a copy of the complaint plus a cover letter spelling out the latters policy. It is up to the insurer to decide whether to admit the claim or not.
In so far as indemnifying the policyholder goes, it means that the insurer must pay all sums of money for which the insured is being held accountable, subject to any policy limits. In a few instances, the insurer may have to perform a third duty which is to settle claims (reasonable) against the policyholder so that the latter is not hit by any judgments in excess of the limit of their policy.
If the insurer breaches any of the above mentioned three duties, they can be held accountable for the tort of insurance bad faith plus they will also have breached their contract with the insured. Professional liability insurance is part and parcel of general insurance systems and are bought in order to safeguard against risks of lawsuits against the insured.
Once you purchase this form of coverage, you can go about your profession in a more confident frame of mind knowing that you have adequate protection against all kinds of lawsuits related to your profession.