What is Professional Liability Insurance?
Professional Liability, otherwise known as E&O insurance, protects your business against claims of negligence, misrepresentation or mistake. Typically, the allegation is that your services, products or employees caused some form of financial damage to a third party. Regardless of fault, litigation is expensive, drains time and damages reputation. Professional Liability insurance can protect professional service providers from potentially devastating financial damages resulting from alleged negligence or error in the delivery of your services.Coverage is provided for:
- Attorney fees and other legal expenses
- Costs and expenses related to a settlement
- Costs and expenses related to a judgment
What is Professional Liability insurance?
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You can relax knowing you’ve secured the right insurance and the right price with Bizinsure. We allow you to compare multiple quotes so you can compare cost and coverage.
Who needs Professional Liability Insurance?
Professionals, and businesses that provide professional services such as giving advice, making educated recommendations, designing solutions or representing the needs of others are all have Professional Liability exposure. Professional Liability Insurance can safeguard your professional reputation, profitability, and business assets from the potentially astronomical expenses of litigation (whether justified or not). Click here for sample scenarios of Professional Liability Insurance in action.
How much does Professional Liability Insurance cost?
Premiums through BizInsure can be as low as $47/month, depending on your potential exposures and the amount of coverage you intend to purchase. Some of the factors that impact the cost, or premium, for a Professional Liability policy include:
- revenue size
- length of time in business
- claims history
- geographic location
- risk management procedures
- the amount of coverage desired
- the size of your deductible
- Click here to get quotes for your specific needs.
Professional Liability Insurance FAQs
Why do you need Professional Liability insurance? What type of businesses need Professional Liability insurance?
Professional Liability insurance helps protect your small business against financial loss. If a customer makes a complaint against your business, it could potentially cost thousands of dollars to defend your business and reputation—regardless of whether the claim is valid or not.
A Professional Liability insurance policy can cover the legal fees, settlements or judgements resulting from a claim. Without one, you could be left out of pocket for these expenses, need to borrow from your personal savings, or even be forced to close your business. Professional Liability insurance helps shield you and your small business from financially negative outcomes.
Most small businesses are not required by law to have Professional Liability insurance. However, a policy may be a wise investment for many types of businesses. Professional Liability policies are often purchased by architects, contractors, engineers, home health providers, real estate agents, as well as by many other people in a variety of occupations.
If you are unsure if you or your small business needs Professional Liability insurance, it may help to consider the following questions:
- Do you ever work with clients who require that you have your own policy?
Some clients require you to have your own Professional Liability insurance policy to work with them.
- Do you provide professional services directly to customers?
A small mistake in your work could mean big financial losses for a customer. Professional Liability insurance can help protect your business from these types of claims.
- Do you offer clients advice based on your business expertise?
Errors, omissions or misunderstandings can happen when providing clients with professional advice. Professional Liability insurance is built to protect you if this happens
If you answered yes to any of these questions, you may need Professional Liability insurance.
Is Errors and Omissions insurance the same as Professional Liability insurance?
Yes, Errors and Omissions (E&O) insurance is the same as Professional Liability insurance. The two names are often used interchangeably. However, you may be more likely to hear about E&O insurance if you work in certain industries, such as real estate or accounting.
Though they go by different names, an E&O insurance policy covers the same things as a Professional Liability insurance policy. This includes shielding your small business against claims of:
- Professional negligence
- Inaccurate advice
- Missed deadlines
- Undelivered services
E&O insurance is important for many small businesses. No matter how careful you or your employees are, mistakes do happen. An E&O insurance policy helps protect your business and reputation in these instances.
E&O insurance helps cover the costs associated with defending yourself against claims of negligence, misrepresentation, and omission. This includes hiring an attorney, paying court costs, and covering any settlements or judgements you are required to pay. Without E&O insurance, your business could be responsible for thousands of dollars in legal fees, even if the claim has no merit. These costs are often devastating for small businesses and sometimes result in the closure of business.
Some states may require small businesses or professionals in certain industries to have E&O insurance to operate in the state. They may set requirements for the minimum amount of errors and omissions coverage you will need to do business. Check with your state’s small business center, department of insurance, or local professional groups to learn more about the requirements in your state.
Do some clients require you to carry Professional Liability insurance coverage?
Yes, some clients do require businesses and professionals they work with to carry Professional Liability insurance. In some cases, clients may require proof of your insurance coverage to win a business contract with them. You may be asked to provide your certificate of liability insurance (CLO) to verify that you are insured and the amount of coverage you have.
Clients often require coverage to provide peace of mind that certain liabilities or losses will be covered should things go wrong during a project. For example, you and a designer are working together on a project for a mutual client. The designer misinterprets your renderings and orders expensive materials which won’t work with your plans. The mutual client sues both of you for professional negligence, demanding that you reimburse them for the unusable materials. Professional Liability insurance will help cover the cost of an attorney to represent you, and any judgements or settlements you are ordered to pay if you are found to be at fault.
Other clients may require you to have your own Professional Liability insurance so they know they will not be held liable for damages or substandard work. For example, one of your designs has a flaw, making it necessary for the builder to tear down his work and start over. Your client sues you for the cost of new materials and labor to rebuild the part of the project that is damaged by your flaw. Professional Liability insurance will cover this claim up to your limits of liability.
What are the things you need to consider before purchasing Professional Liability insurance?
Choosing the right Professional Liability insurance policy for your business is important. There are many things you may need to consider.
Before purchasing Professional Liability insurance, ask yourself these questions:
- Are there minimum amount of coverage requirements in my state for my occupation?
Some states require Professional Liability insurance for certain occupations and businesses. They may also set minimum coverage amounts to operate in the state. Contact your state’s small business development center to learn what is required in your state.
- How much coverage does my business need?
Regardless of what is required by law, the amount of coverage you need will likely depend on several factors. These may include things like the size of your business, your industry and occupation and the level of risk you anticipate.
- What are the risks of my occupation or business?
Every business is unique. Your Professional Liability policy should provide coverage for the unique risks you’ll face.
- Will Professional Liability insurance cover all these risks?
Professional Liability insurance may not cover every type of risk your business may face. You may also need other types of insurance, such as General Liability or a Business Owner’s Policy, to fully protect your business.
- What is the cost of a policy?
The cost of Professional Liability insurance depends on many factors. While the amount you pay in premiums is an important thing to consider, the least expensive policy may not provide the best coverage for your business. Be sure to weigh all factors, including price, before purchasing a Professional Liability policy.
How do I get Professional Liability insurance?
Our team of knowledgeable and friendly support staff are here to help you through every stage of the process and can assist with anything a traditional agent would help you with. There to guide you through the initial questions about your policy, up to renewal, we will be there as the needs as your business grow and change.
Get started today by either filling out the online application here or call one of our agents today at 1-877-900-9998.
How much Professional Liability insurance do I need?
We know you are busy trying to run your business, so we won’t bore you with the nitty-gritty. Like most purchases in life, the higher the quality and level of service of the product, the higher the price tag and the same goes for Professional Liability insurance policy premiums. A policy with increased coverage is going to cost more than a policy with a lower level of coverage.
Each business is different and exposed to varying risks creating its own unique insurance needs. There isn’t a one size fits all policy when it comes to Professional Liability insurance, but there are factors that can affect the pricing and level of coverage you may choose.
To get an understanding of what policy limit options are available, most insurers offer limits of $500,000, $1million and $2million with $1million being the most commonly selected limit.
There are a few factors that you need to consider when calculating the amount of insurance your business needs. This includes assessing the level of risk you anticipate, what deductibles you can afford and the type of business you run.
What’s the difference between General and Professional Liability insurance?
General Liability insurance provides protection for any physical injury that may be caused to people or damage to their property caused by your business operations. An example of a General Liability claim could be a delivery driver who trips and hurts themselves in your store or accidentally spilling a hot drink on a customer’s laptop causing bodily injury.
Professional Liability insurance provides coverage for claims of negligence related to your professional services or advice. A client may make a claim for the financial losses they have suffered, unlike a General Liability claim for bodily injury or damages.
Do I need General and Professional Liability insurance?
General Liability and Professional Liability insurance are two different kinds of policies designed to cover different types of risks. These are some examples of situations when you may require having both of these coverages in place.
- Provides protection against business liabilities– Both General and Professional Liability insurance provide peace of mind and protection if a claim against your business were to occur. They provide financial protection from the incidents caused, helping your business to carry on and keep operating as it would have before a claim.
- Contractual obligations– if you are faced with a specific contract, it is commonly required that businesses must hold a certain level of General or Professional Liability insurance before they can start working for them.
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