Does Your Business Need Professional Liability?

Professional liability insurance, also known as errors and omissions (E&O) insurance, is useful if your company provides professional services to clients. Learn more about whether or not your company needs this important insurance.

What is Professional Liability Insurance?

Professional liability insurance covers errors and omissions, such as mistakes that cause financial harm to clients and failure to perform an agreed upon service. Basically, this insurance policy will cover negligence, inaccurate advice, misrepresentation, and violation of good faith.

While your professional liability insurance usually does not cover criminal prosecution or civil law violations, you can use it to pay for your defense if you’re sued and to cover related damages.

What Businesses Need Professional Liability Insurance?

Some professions require professional liability insurance. For other businesses, it may be a good idea to purchase this coverage, especially if you provide a professional service to clients. Consider these examples.

  • Technology - A technological fail could significantly impact your clients, particularly if you work in the software, hardware or electronic manufacturing field.  
  • Legal - The risk of giving inaccurate advice or misrepresenting a situation makes this coverage essential for lawyers, paralegals, court reporters, and other legal professionals.
  • Real estate - Negligence and other mistakes mandate E&O insurance for professionals in real estate, including contractors and home inspectors.
  • Travel - Booking and other mistakes or omissions prompts travel professionals to purchase professional liability insurance.
  • Advertising - A misrepresentation, error or other mistake can cost clients money and jeopardize an ad agency’s future.
  • Accounting or bookkeeping - Clerical errors or outdated information can cost a client big bucks that the financial professional could be liable to repay.
  • Photographer - Failure to show up for a scheduled event or the accidental damage of photos are covered with professional liability insurance.
  • Consultant - Faulty recommendations or other mistakes affect a consultant’s business.  
When Should you Purchase Professional Liability Insurance?

Always purchase professional liability insurance before you need it. Most policies will not cover errors or omissions that occur before the policy goes into effect unless there’s a retroactive clause.

What Does Professional Liability Insurance Cost?

The cost of your professional liability insurance policy will vary based on your industry, location, coverage limits, and past claims. Ensure you get the most accurate quote and the right coverage when you share copies of contracts, documentation procedures, quality control processes, employee training initiatives, and information about previous professional liability insurance coverage with your insurance agent.

Schedule an appointment with your insurance agent today, and discuss professional liability insurance. It’s valuable protection you can customize for your specific business. As a bonus, your clients gain peace of mind when you take steps to protect their interests and compensate them if something goes wrong.
Need insurance for You, Your Family or Your Business?
We can match you to a qualified, local insurance expert!
Further Reading
As a construction manager, you face the threat of litigation every day. "Just because you think you're doing a good job, and even if you are, that's no guarantee you won't be sued," warns a senior officer of a major insurance company. These suits c...
What distinguishes products, completed operations and professional liability? A product is a good sold to consumers. Think about "things" when you think about products. Products liability covers the business which manufactures the product agai...
Professional liability insurance is essentially there to protect your reputation as a professional. Things happen. There are unforeseeable circumstances that can botch even the easiest job in the most capable hands. When that happens, most co...
When you're facing budget cutbacks, do educational benefits stand out as a prime target? If it's hard to measure the value of a single employee's value to the business, how much more difficult is it to determine the impact of improving this employee'...
A project architect or engineer typically carries responsibility for the design of a house, high rise or other structure. However, contractors now also play a role in project design and may be liable if something goes wrong. Consider the benefits of ...