Professional Liability (E&O)
What is Professional Liability Insurance?
Professional Liability is coverage that protects your company against negligence claims when 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). Whereas General Liability covers mishaps that can happen to any business owner, Professional Liability Insurance addresses the unique lawsuits experts may face. Think of Professional Liability Insurance as the policy for people who make a living off their expertise.
What’s the Difference Between Professional Liability and Errors and Omission (E&O) Insurance?
Nothing. They’re the same thing.
Who Needs Professional Liability Insurance?
Contractors, architects, engineers, doctors, lawyers, brokers, agents, consultants, and more. If your business works directly with customers while providing services, you should consider professional liability insurance.
What Does Professional Liability (E&O) Cover?
E&O covers client lawsuits that allege that you...
- Mismanaged a project or missed a deadline.
- Were negligent in delivering your professional services.
- Provided shoddy, incomplete, or incorrect work.
- Made a mistake or oversight in your technology, code, hardware, etc.
I Need Professional Liability for a Contract. Is Immediate Coverage Available?
Yes. Many clients require their consultants or contractors to have a minimum level of professional liability insurance coverage before they can start a professional engagement. Typically, they will want to see proof you have $1,000,000 of professional liability insurance.
What is a “Claims Made and Reported” policy?
Professional liability insurance only provides protection only as long as your policy is in force. This means that only the claims made and reported in the policy period will be covered. When you cancel your policy you may not have protection in place, even if a claim later arises from work completed during a period in which you had insurance. So it’s wise to keep coverage in place even after you have completed a project.
Where a typical general liability policy will only respond to a bodily injury, property damage, personal injury or advertising injury claim, the most common claims that professional liability covers are negligence, misrepresentation, violation of good faith, and inaccurate advice. Even though professionals are expected to have a certain level of competence in their disciplines, if a professional makes a mistake on the job, an E&O policy can cover the cost of defending your company in a civil lawsuit even if the claims turn out to be groundless.
Still have questions about a Professional Liability Policy? Talk to a Builders’ Choice agent today!