Professional Liability/ E&O

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    More commonly known as errors and omissions (E&O), professional indemnity, or malpractice insurance, professional liability insurance has one goal; to keep you protected from claims against negligence, common mistakes, omissions, misrepresentation, and such. For anyone providing professional services, these claims can be significantly expensive and damage the business a lot. Therefore, this is the first policy bought by them.

    Some people might assume that having general liability insurance makes it unnecessary to have professional liability insurance coverage, however, it has its own place and does not actually cover a lot of scenarios related to services provided that might play out for consultants and such professionals.

    For example, as a construction company, you also provided detailed construction plans for a building, however, your employee put in a few wrong details. You could be sued for negligence. Now, general liability will not cover the claim but professional liability will protect you.

    A well-written professional liability policy will protect you completely by covering all your defense, judgments, and settlement costs.

    General liability vs. professional liability

    Professional liability and general liability can be confused as similar policies and uncertainty about which might be required for a business is common. However, even though there is a small overlap between the two policies, they cover very different scenarios. 

    Where general liability insurance will cover claims for physical injuries and physical damage to the property as a result of your operations; professional liability will cover claims of damage to reputation or damage to property due to your advice or professional service.

    For example, if a pipes bursts in a client’s home while you were redoing the floors, the coverage for the damages will fall under the protection of your general liability policy. However, if the waterproofing details, that they had done as recommended by you in a drawing, happen to fail, it will fall under the protection provided by the professional liability.

    Do you need professional liability or E&O services?

    Professional liability insurance is specifically for people who offer professional services. This includes, but is not limited to; lawyers, HVAC designers, MEP specialists, QC specialists, SOP writers, Architects, civil engineers, interior designers, large construction companies which also offer design services, and any other, that extends its services or advice to a client.

    These individuals are usually required to have a certain specialization or training regarding a certain industry, contracts, or even client standards. If certain standards, as promised before signing a contract with the client, are not met, the professional can be sued by the client. 

    Thus, any individual, small business or even a large company that sells its services to any client should have a professional liability policy in their bag to protect themselves completely.

    In short, you need to make sure:

    • If there is a material impact of your services on the client
    • If they can suffer from financial loss or damage due to your mistakes
    • Are the services you provide variable and customized for every other client 
    • If the services you provide include suggestions or claims that could be misunderstood

    You can call now and talk to our professional liability experts for a detailed discussion and advice on the professional liability policy as per your individual needs, or you can fill out our form to get a no-obligation, free quote for considerations, based on your specific requirements.

    Why is professional liability important?

    Everyone is bound to make a mistake or two in their career, regardless of the experience and expertise. Honest mistakes occur. Professional liability can be your safety net if you do get sued by a disgruntled client, blaming your advice or mistake for their loss.it also covers the claims made for emotional or reputational distress caused to a client by you or your employees.

    For example, an HVAC company advises a client to use a certain brand of heating and cooling systems. Upon installation, a problem occurs which was a part of the manufacturing process. The client sues the HVAC company for recommending faulty equipment. This is where the professional liability insurance will kick in to save the company from extra costs.

    What’s covered by a professional liability insurance?

    Your professional liability insurance will cover all your defense costs, settlements and damages as long as the errors you made were unintentional.

    Some of the most common unintentional acts of negligence include;

    • Bad advice
    • Misrepresentation
    • Violating good faith
    • Copyright infringement

    It is always advised though, that you review your particular professional liability policy, so you know exactly what it covers and if it is as per your specific needs. You can call now and talk to our professional liability experts for a detailed discussion and advice on the professional liability policy as per your individual needs, or you can fill out our form to get a no-obligation, free quote for considerations, based on your specific requirements.

    What is not covered by professional liability insurance?

    Professional liability insurance will not cover you incase the damage, act or advice is proven to be inflicted intentionally. It will, in fact be considered a criminal offence.

    Another scenario in which professional liability will not protect you, is if you knew about a claim before inception of the policy. You must report the matter as soon as found out. Otherwise it will not protect you.

    Other issues it does not cover are bodily injury and property damage. These are specifically covered by general liability. 

    What will be the cost?

    Professional liability insurance policies have a deductible which represents a certain amount of money that a business will have to pay before the coverage can protect you. The deductible usually reduces the amount of premium you have to pay.

    You can have two options regarding the payment of the deductible;

    • Pay annually
    • Pay each time you file for a claim

    Some of the other factors considered when defining the cost for a professional E&O insurance policy are;

    • The industry
    • Location
    • Coverage limits
    • Company size
    • Experience in the field
    • Claims history

    All these are the factors that determine what the professional liability will cost you as per your needs and specifications. You can call now and talk to our professional liability experts for a detailed discussion and advice on the professional E&O policy as per your individual needs, or you can fill out our form to get a no-obligation, free quote for considerations, based on your specific requirements.

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