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Answer :
Final answer:
Professional Liability Insurance, also known as Errors and Omissions Insurance, protects service-providing agents from lawsuits due to failure to render services. It covers legal fees and settlements, safeguarding the financial well-being and professional reputation of the insured.
Explanation:
The type of insurance that protects an agent and even pays claims if a lawsuit is brought against them as a result of failing to provide a service to a client is called Professional Liability Insurance, commonly referred to as Errors and Omissions (E&O) insurance. This insurance is key for professionals who provide advice or services. Imagine a situation where an insurance agent fails to procure a policy for a client, and that client suffers a loss that would have been covered. The Professional Liability Insurance would help cover the legal costs and any resulting settlement or judgment against the agent, thus protecting the agent's financial stability and reputation.
Insurance in general is a method of protecting individuals and businesses from financial loss, involving policy holders making regular payments to an insurance company. The company then compensates the insured if they suffer a loss covered by the policy. Different insurance types like health insurance, car insurance, and homeowner's insurance, each serve a specific purpose and market.
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Final answer:
The insurance that protects an agent and covers claims for failing to provide a service is known as professional liability insurance or errors and omissions (E&O) insurance. This insurance is important for service professionals facing the risk of legal action due to professional negligence or error.
Explanation:
The type of insurance that protects an agent and pays claims in the event of a lawsuit arising from failure to provide a service to a client is called professional liability insurance or errors and omissions (E&O) insurance. This insurance coverage is crucial for professionals who provide advice or services, as it mitigates the risk of being held responsible for damages resulting from oversight or negligence in the course of their work. This insurance works by making regular payments known as premiums to the insurance provider, which in turn, offers protection against certain financial losses.
Just as car insurance, health insurance, and others are essential in safeguarding against unforeseen events, professional liability insurance is vital for service professionals who may otherwise face significant financial burdens due to legal action from dissatisfied clients. It is a specialized type of coverage designed to address the unique risks associated with professional service and advice.
