Professional Liability Insurance
Professional liability insurance
Professional liability insurance, also known as errors and omissions (E&O) insurance, is a special type of coverage that protects your company against claims that a professional service you provided caused your client to suffer financial harm due to mistakes on your part (errors) or because you failed to perform some service (omissions). There is no one-size-fits-all policy for professional liability insurance. Each industry has its own set of concerns that will be addressed in a customized policy written for a business.
E&O insurance can cover certain damages awarded and/or the cost of defending your company in a civil lawsuit even if the legal action turns out to be groundless. Professional liability insurance is required by law in some areas for certain kinds of professional practices, especially medical and legal, where it is more commonly called malpractice insurance. This type of protection is not part of your general liability insurance or homeowners insurance.
Coverage does not include criminal prosecution, and there is a wide range of potential liabilities under civil laws that may not be covered unless written explicitly into the professional liability insurance policy. Common claims that professional liability insurance covers are negligence, misrepresentation, violation of good faith and fair dealing, and inaccurate advice. Some policies could also cover privacy violations.
One thing to consider when choosing a Professional Liability insurance provider is that many professional liability insurance policies are written on a “claims made” basis with a retroactive time frame. For example, if a claim is made against you for an act that happened before the retroactive date on the policy, that claim won’t be covered. So when selecting your Professional Liability policy consider the retroactive date and remember, generally the farther back the date, the better.
Who Needs Professional Liability Insurance?
Many types of businesses need professional liability insurance. In some states certain kinds of professional practices are required to carry professional liability insurance. In other cases, a client may require a business to have professional liability insurance as a condition of a contract to do work.
If you work directly with customers by providing services, consider a professional liability insurance policy. A customer or client can sue even if you’ve done nothing wrong. If a customer or client believes for example, they received inferior service, mistakes were made or they received bad advice from your company, they may make a claim or even sue your business.
Professional liability insurance helps cover common claims including negligence, misrepresentation, violation of good faith and fair dealing, and inaccurate advice. Depending on the terms, a professional liability insurance policy may also help cover privacy violations.
Having professional liability insurance can help protect you and your business from the time-consuming work and costly expenses that come with mounting a legal defense after a client sues. Talk to your trusted agent to find an option that’s right to protect your business.