Professional Liability Insurance, also referred to as Errors & Omissions Insurance (E&O) or Malpractice Coverage, keeps your company protected from civil lawsuits for common mistakes, negligence, misrepresentation claims and more.
Malpractice Insurance is used for medical professions, Error & Omissions Insurance is for real estate agents and Professional Liability Insurance generally covers the rest of us business owners. The name can differ in various professional circles, but in the end, it works the same.
Professional liability insurance is typically the first policy purchased by anyone providing professional services such as lawyers, accountants, and consultants, as they realize these claims can be among the most expensive.
Professional Liability Insurance Explained
A single lawsuit could hurt your business beyond repair. A Professional Liability policy can help alleviate the financial burden of a lawsuit, protecting your business following a claim. Professional liability insurance policies are generally arranged on a claims-made basis, which means coverage is only good for claims made during the policy period.
For example, if a service you provided did not have the expected or reasonable results in the eyes of your customer, you could be sued. This policy can protect you financially from these types of claims.
Who Needs Professional Liability Insurance?
This type of insurance is useful for any business that offers professional services, such as lawyers, accountants, investment advisors, consultants, real estate agents, architects, engineers, medical experts, and others.
Professions that require specialized training and their practice much meet certain state, industry, contract or client requirements, should look into a professional liability insurance policy. If you are unsure about whether you fall into this category, ask yourself these questions:
- Are my clients at risk of monetary damages if I give bad advice or make a mistake?
- Is there material impact on my clients if I make a mistake of upset a client?
- Do I ever make suggestions or claims that could be misconstrued?
- Is there a wide variation of the services I provide from person to person?
If you’re answering “yes” to any of these questions, you should have a Professional Liability Policy. If you still aren’t positive, contact Chastain Otis today to clarify.
What are the Differences Between General Liability and Professional Liability Insurance?
A common question we see among small business owners. Understanding how they are similar and how they differ can help you decide which is best for your situation. In the end, you may find that you need both.
General Liability and Professional Liability Insurance are both designed to:
- Protect against business liabilities. They both help alleviate the financial burden a lawsuit could ensue on your company.
- Meet contractual requirements. Some employers or clients may require you carry a specific amount of liability coverage before working with them.
The big difference is the type of risks they cover:
- General Liability protects against physical injury or damage to property from daily operations.
- Professional Liability covers negligence related to a professional service or advice.
Think of it as financial loss versus physical injury or damages.
What’s Missing in Professional Liability Insurance?
It always depends on the policy. But in general, coverage does not all forms of legal liability. Coverage also does not include criminal prosecution. Coverages for data breaches or other technology may also not be included, and for that, you would need to look into a Cyber Liability Insurance policy.
Finding the Right Liability Insurance for Your Business
Getting the correct coverage for your company doesn’t have to be hard. Contact Chastain Otis Insurance to speak with an independent agent today. They can get you the right policy for your business and answer any questions you may have. Reach out today to learn more.