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What does Professional Liability insurance cover?

Also known as Errors and Omissions insurance, Professional Liability insurance is designed to protect your business against claims for negligence, misrepresentation or mistakes. As a professional, you are exposed to the potential risk of clients making allegations for financial damages due to the services or products your business provides.

For certain kinds of professional practices like medical and legal, Professional Liability insurance is required by law. It is important to remember that this type of insurance is not part of a General Liability insurance policy.

What actions could result in a Professional Liability claim?

Below are some examples of different professions and the potential type of claims that could be covered by a Professional Liability insurance policy.

Example 1- An IT engineer builds a faulty website for a client that crashes just before they launch a new product. The client sues the IT engineer for negligence and loss of income.

Example 2- The expertise of an architect has been hired to build a new building for a client. The architect stamps or signs off on plans that have an error in calculation.

What does a professional liability insurance cover? Even if you are not found liable, a claim can have a devastating impact on your business’ finances, your time and your reputation. This is where Professional Liability insurance becomes vital to safeguarding your business financially for the long run.

If your business is sued, Professional Liability insurance covers your legal expenses, including the required legal representation and damages to the victim if awarded. Even if you not found liable, your policy will cover the related legal costs to defend your lawsuit.

Professional Liability insurance will typically cover:

  • Attorney fees and other legal expenses
  • Associated settlement costs and expenses
  • Costs and expenses related to a judgment

Professional Liability insurance does not include cover for criminal prosecution and there may be liabilities under civil laws that may not be covered in a policy. To understand the exact inclusions and exclusions of your coverage refer to your policy’s wording.