The Importance of Professional Liability Insurance
Professional liability insurance, also known as errors & omissions insurance, is needed for professionals who provide services that could cause economic damage to their clients. Common professions that carry this coverage include physicians, attorneys, accountants and real estate agents, among others. Typically, these policies will cover your legal defense and settlement costs resulting from a client claim of damages. It is important to note that most of these policies are written on a claims-made basis, so you must have coverage in place when the error occurs and also when you report the error or claim to your insurance agent or carrier.
A critical distinction between professional liability and general liability insurance is that general liability only covers common property damage, bodily & advertising injury and medical costs. Due to the probability of some claims being potentially covered under both a professional liability and general liability policy, it is beneficial to have one policy with both coverages if possible. The overall costs to purchase professional liability coverage is minimal compared to the potential financial loss to your business from a significant claim. Even if you are found not at fault in a claim, you can often incur tremendous legal bills which would be covered under your professional liability policy limits or possibly as a separate limit of coverage. In addition to errors and omissions coverage, professional liability can include directors & officers liability, employment practices liability and cyber coverage.
