Professional Liability Insurance Overview

General Liability Insurance provides coverage for your business operations, including any accidents that happen on your premises.  However, it does not provide any coverage for financial losses that your customers and clients have that are due to your errors, negligence, or omissions in how you do your work.

Professional Liability, also known as Errors and Omissions, is vital coverage many businesses need. Without Professional Liability, this can leave a large gap in coverage, meaning the business owner would be on the hook for any claims that fall under Professional Liability’s purview.

Who Should Have Professional Liability Coverage?

Any service-based business, including those that provide consulting or advice, should have professional liability coverage in place.

Examples of businesses that need Professional Liability include Consultants, Insurance and Real Estate Agents, Brokers, Accountants and Bookkeepers, IT Professionals, Financial Advisors, Architects, Doctors, Lawyers, manufacturers, and Engineers.

Some businesses, such as architects, engineers, doctors, and lawyers, have specific Professional Liability policies tailored to their business attributes.

What does Professional Liability Cover?

If a customer or client loses money due to your failure to provide a service or a mistake you made, that loss is covered by Professional Liability.  It covers your legal expenses and provides the legal defense needed to respond to claims, so you don’t have to pay out of pocket.

Professional Liability provides coverage for professional negligence, acting against clients’ best interests, failing to meet deadlines, or failing to provide the expected standard of service.

It also covers mistakes your business makes and provides a defense against allegations arising from alleged mistakes.

Elements of a Professional Liability Policy

While many General Liability policies are Occurrence-based, Professional Liability policies are claims-made. With an occurrence policy, you can file a claim at any time, even after a policy is canceled or expired, provided that the incident took place while a policy was in place with active coverage.

For claims-made policies, the claim must be reported while the policy is active, and the incident or event must happen after the policy’s retroactive date.   If there is no in-force policy, there is no coverage.

The Retroactive date is the earliest date that your policy will provide coverage.  Tail coverage is when you purchase an extended reporting period for claims to be reported, and it is very important to buy if you are closing your business or selling it, because you can add extra time for claims to be discovered and reported for incidents that happened during the time the policy was active.

The coverage limits include a policy aggregate per policy term and per claim amount. There is also a deductible, which is the amount you pay before the carrier covers the claim.

Policies also include some exclusions, the most common being that they will not cover any claim that should be covered under another policy, such as EPLI or General Liability, intentional wrongdoing, or criminal acts.

At Fixated Financial, we can help protect your business with Professional Liability coverage.  We have developed underwriting relationships with our Brokers to provide a wide range of quote options for this line of business.    Please call us today for a quote, or for a review of your current policies.