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Property Liability Insurance also referred to as Errors & Omissions Insurance (E&O), is an important policy that saves your skin in case you make a mistake while delivering a service, fail to deliver on what you promised to do or fail to deliver at all.

I have General Liability Insurance—Do I Still Require Professional Liability Insurance? 

General liability insurance only covers claims arising from physical injury to customers, damage to a third party’s property, or instances of libel or slander. If a member of your medical practice makes an error and a patient files a lawsuit, your general liability insurance won’t cover the legal fees and potential settlement arising from it.

One industry where errors & omissions insurance is highly valued is the investment industry. Investors often bring lawsuits against brokers and advisors for investments that go badly, even if there was a reasonable understanding of the risks.

That said, even when these claims are baseless, the cost of defending oneself against them can be quite high. As a result, a good errors and omissions insurance policy comes in handy.

In some cases, Professional Liability Insurance is known as malpractice insurance. Malpractice insurance only covers bodily harm caused by professional negligence.

Need help finding the right protection for your business?
Get a free quote by either calling us at 1 888-654-6030 or get a quote online.

Our easy, no-jargon online tool walks you through the process. You can walk away with an estimated insurance quote in under 5 minutes.


Who Needs Professional Liability Insurance?

It’s important to speak with your insurance advisor to determine your risk.

You may have professional risks that aren’t covered by your general liability insurance policy and not even know it. Make the effort and ask your advisor whether you need errors and omissions insurance because it’s better to be safe than sorry.

That said, there is no ambiguity when it comes to certain professions. The following professionals should definitely have errors and omissions insurance:

  • Doctors*
  • Dentists*
  • Chiropractors*
  • Physical therapists*
  • Lawyers
  • Accountants
  • Engineers
  • Financial advisors

* Medical Malpractice Insurance

Professional Liability Insurance Policyholders Claims Examples
Doctors* ●      Patient dies/requires life-saving surgery after a doctor fails to act on his complaints
Dentists* ●      Dentist performs a sub-standard root canal
Chiropractors* ●      Patient sustains a serious injury during a neck manipulation
Physical therapists* ●      Client claims physical therapist didn’t provide entire treatment
Lawyers ●      Lawyer forgets to complete and file time-sensitive documents
Accountants ●      Client has to pay back taxes/interest due to their accountant’s error
Engineers ●      Structural issues are found in a building due to an engineer’s oversight
Financial advisors ●      Client loses a substantial amount of money due to bad investment advice

* Medical Malpractice Insurance 
Table: Professional Liability Insurance Coverage for Different Professions

 

Even if a professional isn’t found responsible for a loss or injury (i.e. death in the case of a doctor or lost life savings in the case of a financial advisor), it is very expensive to defend oneself against a lawsuit. Professional Liability Insurance helps you cover these costs, up to your insured amount.

And the stakes don’t have to be as dramatic as someone’s life savings (or life).

Imagine a wedding photographer is responsible for capturing a couple’s special day. They take photos of the ceremony, the reception, the bridal party, the guests, the grand entrance, the first dance, the father-daughter dance…but they don’t take appropriate measures to back up their work.

A few weeks later they let the bride and groom know that they don’t have a single photo from their big day. Oops.

Even with all of the money in the world, there’s no way to go back in time to the wedding and take the photos again. While the photographer can certainly refund the fee, they can’t compensate for the emotional distress, and they may have to pay some kind of compensation.

As you can see, it’s not always obvious that you’ll need errors and omissions insurance until you sit down and assess your risks.

As we mentioned above, it’s smart to chat with your insurance advisor or a lawyer to assess your exposure to professional liabilities. Generally speaking, if you provide a service, depending on the stakes involved and the amount of money a client stands to lose, there is the chance claims can be brought against you whether they’re fair or not.

And keep in mind that it’s not just about making a mistake. If you don’t perform a service completely, well, or on time, there’s a possibility that clients will take legal action. So anyone from a personal trainer to a wedding planner to an app developer can benefit from errors and omissions insurance.

 

What Are a Few Examples of Situations Where Professional Liability Insurance Can Protect You?

You don’t have to stretch your imagination too far to picture a scenario where Professional Liability Insurance comes in handy. In fact, you don’t even have to stretch your imagination at all.

Scenario One: The Architectural Technician

An architect drafting something for a client. There is the risk of error, especially when working with multiple contractors. Professional Liability Insurance can protect from any lawsuits.
An architect drafting something for a client. There is the risk of error, especially when working with multiple contractors. Professional Liability Insurance can protect from any lawsuits.

A new building was being constructed next to a strip mall. The engineering firm in charge hired an architectural technician so they could coordinate their core drilling. This architectural technician had errors and omissions insurance. In an unlucky turn of events, they drilled into a water main, rupturing the device and flooding the area.

The situation went from bad to worse when a nearby restaurant about to have its grand opening was flooded as well. The restaurant wanted $250,000 in compensation. They reached a settlement and the legal fees came to $20,000.

 

Scenario Two: The Insurance Broker

Professional Liability Insurance is required if you are a Life Insurance Agent or Broker.
Professional Liability Insurance is required if you are a Life Insurance Agent or Broker.

Here’s an example where you can think you’ve done everything right only to have a miscommunication land you in some hot water.

An insurance broker, who had professional liability insurance, provided a commercial insurance policy for a client. The client’s business had multiple properties, and the insurance covered all of them.

The policy offered a blanket coverage amount for all of the properties, but the client thought that financial coverage was for each property.

So when a fire shut the business down for four months, the business owner wasn’t too pleased with his insurance and sued the broker for misrepresentation. A settlement was negotiated and the legal fees came to $32,000.

 

Scenario Three: A Doctor, A Misdiagnosis, A Lawsuit 

Medical Malpractice is a type of Professional Liability Insurance that can protect you in the case where you are presented with a lawsuit for a misdiagnosis.
Medical Malpractice is a type of Professional Liability Insurance that can protect you in the case where you are presented with a lawsuit for a misdiagnosis.

The family of the patient sued the doctor for $100,000 claiming that he hadn’t properly evaluated the patient or suitably treated him. When it was found that the doctor had done everything he was supposed to, the family dismissed the case, but in the end, the legal fees were $35,000.

As you can see from these examples, owning professional liability insurance doesn’t just cover you when you’re found responsible. It makes sure you aren’t financially ruined trying to prove you aren’t responsible, as well.

 

Medication was prescribed by a doctor for a patient but they were misdiagnosed. Professional Liability insurance can protect you in the case where you are presented with a lawsuit.
Medication was prescribed by a doctor for a patient but they were misdiagnosed. Professional Liability insurance can protect you in the case where you are presented with a lawsuit.

 

Need help finding the right protection for your business?
Get a free quote by either calling us at 1 888-654-6030 or get a quote online.

Our easy, no-jargon online tool will walk you through the process. You can walk away with an estimated insurance quote in under 5 minutes.


 

How Does Professional Liability Insurance Help You Grow Your Business?

Purchasing a professional liability insurance policy can prove useful before any accidents any happen.

If your business is part of a professional association, that organization may require valid professional liability insurance policy.

There’s also the chance that some customers won’t want to work with you unless you have an acceptable amount of professional liability insurance coverage.

How Much Does Professional Liability Insurance Cost?

The cost of professional liability insurance will vary and depend on the nature of your business and the risks associated. This depends on the nature of your work and the size of your particular business. For perspective, the following are some samples of what the cost could look like (professional liability insurance alone—not including any additional policies):

  • Consultants start at $400
  • Engineers pay around $1000
  • Software developers start at $500
  • Photographers start at $300

Get your free quote now

 

Accidents Don’t Have to Equal Financial Ruin with Professional Liability Insurance

Accidents happen, but they don’t need to mean the complete destruction of a business. Assessing your company’s risks and purchasing the necessary amount of errors and omissions insurance should be a priority for any company offering a professional service or advice.

 

What You’ve Learned About Professional Liability Insurance

  • Professional liability insurance is not the same as General liability insurance, which only covers claims arising from physical injury to customers, damage to a third party’s property, or instances of libel or slander.
  • Medical malpractice insurance is a type of professional liability insurance that is used to cover health care practitioners (e.g. a doctor, dentist, chiropractor etc…). If a member of your medical practice makes an error and a patient files a lawsuit, your general liability insurance won’t cover the legal fees and potential settlement arising from it.
  • If you offer a service, you should definitely own professional liability insurance for your business. Whether you’re an Architect, an Accountant, a Financial Advisor, an Engineer.
  • Owning professional liability insurance helps your business. If you or an employee of your business is a member of an association, you may be required to own a valid professional liability insurance.

 

Need help finding the right protection for your business?
Get your free quote by either calling us at 1 888-654-6030 or get a quote online.

Our easy, no-jargon online tool will walk you through the process. You can walk away with an estimated insurance quote in under 5 minutes. 

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