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WHAT IS PROFESSIONAL LIABILITY INSURANCE?
Professional Liability Insurance (PLI), also called Errors & Omissions Insurance (E&O), in combination with your general liability insurance provides additional coverage should a customer/client be harmed as a result of your service or advice if you're legally found at fault.
Protects businesses against client lawsuits claiming that work was unsatisfactory, negligent, late, or never completed.
When do businesses need professional liability insurance?
Why do I need professional liability insurance?
Professional liability insurance is designed for professionals who make a living off their expertise. It addresses risks unique to providing specific services, such as an engineer who misses a project deadline or an architect who makes a mistake with plans for a building.
If the client sues, this policy covers the cost of a lawsuit up to your policy limit. Clients may request a certificate of insurance as proof that you have this coverage.
Professional liability policies typically cover:
- Work oversights
- Undelivered services
- Accusations of negligence
- Missed deadlines
- Services provided (or not provided) by your company that result in client damages.
- Copyright Infringement
- Copyright law issues along with mistakes, oversights, and misunderstandings sometimes occur-no matter how hard you work to guard against them.
- Personal Injury
- Personal injury claims such as libel and slander (regardless if the claims are valid or not).
Who should consider professional liability insurance?
If your business:
- Provides a professional service
- Regularly gives advice to clients
- Services your client for contractual purposes
What’s the difference between professional liability and errors and omissions insurance?
Professional liability insurance is also called errors and omissions insurance (E&O). Different industries and professions have adopted different names for this coverage, even though it’s otherwise identical.
Different industries and professions have adopted different names for this coverage, even though it’s otherwise identical.
Professionals who use the term professional liability insurance include:
- Accountants
- Architects
- Consultants
- Engineers
Professionals who instead use E&O include:
- Insurance agents
- Real estate agents and brokers
- Tax preparers
- IT / technology professionals
- Additionally, medical and legal professionals, such as doctors and lawyers, refer to this policy as malpractice insurance.
What does a professional liability insurance policy cover?
What other items may be covered under professional liability insurance?
Previously Performed Services
Service completed (for an agreed timeframe), which is protection for current, future, and previous work-all in one policy.
Defense Costs
Legal defense costs associated with lawsuits against your company (regardless of fault).
Temporary Staff And Independent Contractors
Employees representing your company, including temporary staff and independent contractors.
What type of business can be covered by professional liability (or E&O) insurance?
If your business provides customers with specialized or creative services, you need professional liability or E&O insurance. Mistakes happen, that's where we can help you with insurance protection.
Designed for a wide range of occupations, there is a professional liability or E&O insurance policy that will help with your business needs. Below are a few examples of businesses that can be covered:
- Beauticians/Salon Services
- Career/Business Trainers & Coaches
- Family/Mental Health Counselors
- Management/Business Consultants
- Occupational Therapists
- Personal Trainers
- Photographers
- Real Estate/Property Managers
- IT Consultants
- And more...
How professional liability insurance protects different professions
Accountants and auditors
Professional liability insurance for accountants and auditors covers the costs of lawsuits based on accounting errors, data entry errors, miscalculations, or lost documentation. Because the policy offers indirect financial protection for the client, some clients will require proof of insurance before they agree to work with your firm.
Architects
Professional liability insurance protects architects against accusations that a building design does not meet project specifications, was delivered late, or contained errors. A client contract might include a clause that requires this policy’s protection.
Consultants
Professional liability insurance for consultants offers financial compensation for lawsuits alleging ineffective advice or inaccurate projections. Before they agree to work with you, some clients may ask you to provide proof of professional liability insurance.
Engineers
Professional liability insurance for engineers provides financial protection from lawsuits stemming from disputes like cost overrun, delivery delays, and problems with construction materials. You may need to provide proof of professional liability insurance to a client, partner, or licensing board for some projects.
Will professional liability cover me even if the lawsuit is baseless?
Yes. Regardless of whether a claim against you is determined to be frivolous or not, your professional liability coverage would defend against a lawsuit claiming your professional neglect.
What’s the difference between professional liability and general liability coverages?
General liability coverage only protects against “third-party” damages for which you’re responsible (i.e. bodily injury to others or damage to their property ). Professional liability protects you from claims of neglect or professional errors.