What Is Professional Liability Insurance?
Think of Professional Liability Insurance (also called Errors & Omissions Insurance) as the policy for people who make a living off their expertise. Whereas General Liability Insurance covers mishaps that can happen to any business owner, Professional Liability Insurance addresses the unique lawsuits experts may face. The two policies complement each other to provide a broad spectrum of coverage for small businesses. Who counts as an expert? Doctors, lawyers, IT consultants, architects, engineers, and others. If your business relies on your expertise, you’re expected to have extensive training in your field. Your work must meet standards set by your state, industry, or client contracts. Fail to meet these standards, and you could wind up in court. Professional Liability Insurance can help pay for lawsuits when clients accuse your business of:Work Mistakes
If clients sue you over an error that costs them money, Professional Liability Insurance can help pay for their losses.
Undelivered services
If you promise your client a result your finished work doesn’t deliver, Professional Liability Insurance can help cover the lawsuit expenses.
Negligent services
If your work doesn’t meet industry standards, Professional Liability Insurance can help pay the legal bills when your client sues.
What Is Errors & Omissions Insurance?
Errors and Omissions Insurance (also called Professional Liability Insurance) does what its name implies: it covers your professional mistakes (errors) and the things you overlook (omissions). If you’re sued over a professional mistake or oversight, this policy can help you pay for legal expenses. A typical E&O lawsuit costs $140,584, according to the National Center for State Courts. And that’s just the amount awarded to your client – it doesn’t include your own legal fees. Tack on another five figures for what you’ll pay a lawyer to put your case together. E&O Insurance is most common in professional service industries such as architecture, engineering, software development, law, medicine, insurance, and accounting. Whenever someone is paying for your expertise, it’s a good idea to have insurance that can cover you if you slip up.
What's the difference between Commercial General Liability and Professional Liability insurance?
Commercial General Liability covers bodily injury and property damage connected to your operations or space – and lawsuits stemming from your communications. Professional Liability protects you from complaints about your professional services or work.
What kinds of legal claims should I be preparing for?
A client might sue you for not delivering what you agreed upon contractually – or claim your professional service caused injury, loss of earnings or other financial loss to them.
What if I've done nothing wrong ... and I can prove it?
You’ll still have to pay to defend your business, which can add up fast. Even if the claim against you is thrown out (or settled out of court), you’ll need an attorney to file your paperwork and represent your business.
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