What is Professional Liability Insurance?
Professional liability insurance, also called errors and omissions insurance (E & O insurance) or indemnity insurance, protects your business if you are sued for negligently performing your services, even if you haven’t made a mistake. View our quote examples to understand how much professional liability insurance costs. Some examples of what could be covered are below.
Why do I need Professional Liability Insurance?
Professional liability insurance coverage gives your business protection from the risks you face in delivering your professional services. The section below discusses everything our professional liability insurance coverage offers since we want you to feel secure about what your policy does and doesn’t cover. You should consider professional liability insurance coverage if your business:
- Provides a professional service.
- Regularly gives advice to clients.
- Is requested by a client to have professional liability insurance to complete a contract.
What does Professional Liability Insurance cover?
What is covered?
- Alleged or actual negligence
- Defense costs
- Personal injury (e.g., libel or slander)
- Worldwide coverage
- Temporary staff and independent contractors
- Claims arising from services provided in the past
- Claims and damages
What is not covered?
- Bodily injury or property damage
- Fraudulent acts
- Employment matters
- False advertising
- Patents and trade secrets
- Personally identifiable information
- Other services
Examples of Professions that need Professional Liability Insurance
- Legal Service (Lawyers, Attorney, Smaller Legal Practice, Larger Law Firm, etc.)
- IT/ Technology (IT consultants, Application service providers, Database administrators/designer, Computer consultants, Computer programmers, Hardware installation experts, Integration Specialists, IT project managers, Online security specialists, Software developers, System designers, Website developers, etc)
- Health, Beauty & Well-being (Barbers, Cosmetologists, Beauticians, Estheticians, Hair Dresser, Nail Technicians, Small Salon Owners, Spa Owners, etc.)
- Therapists (Family Counselors, Hypnotists, Marriage Counselors, Mental Health Counselors, Occupational Therapists, Psychologists, Social Workers, etc.)
- Architecture & Engineering (Architect, Building Inspector, Civil Engineer, Project Manager, Control System Integrator, Draftsman, Electrical Engineer, Environmental Engineer, Industrial Engineer, Interior Designer, Landscape Architect, Transportation Engineer, etc.)
- Real Estate (Property Managers, Safety Consultant, Business Consultant, etc.)
- Consulting (Research Specialist, Safety Consultant, Accountants, etc)
- Marketing (Management Consultant, Graphic Design, Direct Marketing, etc.)
Professional Liability Insurance Versus Malpractice Insurance
Professional liability insurance helps cover businesses in various industries if a customer sues or claims a negligent act, error, or omission in the service provided resulted in financial harm.
Malpractice insurance is a type of professional liability insurance. It provides coverage protection against claims of negligence or misconduct by physicians and other healthcare professionals, such as dentists, nurses, or physical therapists. A malpractice claim can be filed if a person is hurt or damaged because of an error made by the healthcare professional.
Whether it’s malpractice insurance or any other type of coverage, the objective of professional liability insurance is to keep a business in operation. Professional liability insurance is a policy that helps cover a mistake made by your business or a wrongful act attributable to your company.
Professional liability insurance helps businesses weather the impact of a significant mistake that may cause harm to a client or customer. These situations often result in lawsuits. A professional liability insurance policy can help cover the legal costs associated with putting together a defense plan.
Those working in a profession that provides advice to clients or provides a service to clients can be held responsible by the customer if something goes wrong. If the service they received did not meet their expectations, they can sue. And if the service causes physical problems or financial harm to the customer, your company could be liable.
Here are some examples of how having a professional liability insurance policy can help protect businesses in different industries:
- Example 1: A travel agent is hired to book a family vacation. As the trip nears, the travel agent realizes they booked the wrong week. The family is unable to go on the vacation during the booked week because of scheduling conflicts. The family sues the travel agent for the money they paid for airline and hotel reservations.
- Example 2: An advertising agency is hired by a toy company to promote a new toy for the holiday season. One of the designers misrepresents a feature of the toy in the materials created. The toy company sues the advertising agency for lost revenue because they weren’t able to fully market the toy during the holiday season.
- Example 3: A court reporter receives a letter from an attorney demanding transcripts from a deposition they did a week ago. The court reporter realizes the transcript was accidentally deleted from their hard drive. The court reporter discloses the error and is sued by the attorney for costs to have the witness deposed again.