What type of insurance provides coverage against the risk of financial losses due to misrepresentation or deceit?

The correct answer is professional liability insurance. This type of insurance, also commonly known as errors and omissions insurance, is specifically designed to protect professionals against claims of negligence, misrepresentation, or misleading advice that could result in financial losses for clients.

Professional liability insurance is essential for individuals in certain professions, such as doctors, lawyers, accountants, and consultants, where the risk of being sued for providing inaccurate information or failing to deliver competent services is higher. It covers legal defense costs and any settlements or judgments that may arise from such lawsuits.

While error and omission insurance is closely related and often used interchangeably with professional liability insurance, it typically refers more specifically to coverage available for those in the insurance and real estate industries. Fraud insurance generally pertains to coverage against fraudulent acts specifically, making it somewhat narrower in scope. Health insurance fraud prevention focuses on preventing fraudulent activities related to health coverage rather than providing a safety net for misrepresentation in broader professional contexts.

Therefore, professional liability insurance rightly addresses the financial losses that can stem from professional misrepresentation or deceit in various fields.