Professional Liability Insurance Coverage
Small businesses offering advice or services should consider getting professional liability coverage. Often called errors and omissions (E&O), this insurance protects companies from claims of negligence or other mistakes that can lead to a client's financial loss.
Our team of experts is here to help you understand professional liability coverage and recommend a policy that meets your needs. Get a free quote today.
Why is professional liability coverage important?
Professional liability insurance coverage is important because it offers small businesses financial protection while helping them maintain and build client trust. It also lets professionals concentrate on providing the best possible services without worrying about potential lawsuits.
Some states require certain professionals like consultants, attorneys, and accountants to have professional liability insurance coverage. Additionally, a client's contract may require you to have a certain amount of coverage before you can enter a working relationship.
What does professional liability insurance cover?
Professional liability protects against legal liability resulting from things like:
Negligence
Negligence in professional liability coverage refers to a business's failure to perform expected duties. For instance, a tech firm rushes its product to market without fully testing it and users experience financial setbacks as a result.
Misrepresentation
Professional liability insurance coverage protects you if you accidentally provide false or misleading information. For example, a real estate agent mistakenly shares that a piece of property is zoned for commercial use. Relying on this information, a buyer purchases the property and suffers financial losses when they can't develop it as planned.
Inaccurate advice
If your professional advice leads to a client's financial loss, professional liability coverage can protect your small business. For instance, a financial advisor gives investment advice that causes a client to lose a significant amount of money.
Copyright infringement
If you unknowingly use someone else's copyrighted material, a patent, or a trademark without permission professional liability coverage can help. For example, a designer creates a logo and unintentionally uses elements found in a trademarked logo for another company. The other company notices and claims that it confuses customers and harms their brand.
Personal injury
Although professional liability coverage primarily protects against claims related to financial loss, it can also cover certain types of personal injury. Examples include non-physical injuries such as libel and slander, false arrest, and wrongful eviction.
For instance, a marketing consultant creates an ad campaign for a client. In one of the ads, the consultant includes false information about a competitor, which damages the competitor's reputation. The competitor then sues the client for libel.
Omissions or failing to deliver a service
Professional liability insurance coverage can help if your business fails to take necessary action or meet contractual obligations. For example, an architect designs a new building but forgets part of the building's structural support. This oversight results in a redesign, which significantly increases the project's costs.
What is not covered by professional liability insurance?
Relying solely on professional liability coverage limits your company's overall insurance protection. Progressive Commercial offers a range of products for events that professional liability doesn't cover. Explore additional options, including:
- Owned commercial property: Safeguard your commercial property, including equipment and goods, with a business owners policy (BOP).
- Employee injuries: Required by law in most states, workers' compensation supports employees with job-related injuries or illnesses.
- Bodily injury and property damage: If someone gets hurt in connection with your business, general liability insurance can help. It also includes third-party property damage related to your operations.
- Commercial vehicles: If your business depends on vehicles, you might need commercial auto insurance to protect against accidents on the road.
Additionally, professional liability insurance coverage does not protect against fraud or intentional acts. It covers accidental or inadvertent events.
Claims-made vs. occurrence
Claims-made and occurrence policies determine when your coverage starts and when you can report a claim. With a claims-made policy, professional liability tail coverage extends the time you can report a claim after coverage ends. This is important in professions where there may be a long time in between a covered event and when a claim is filed, like in the legal field.
How much professional liability coverage do I need?
Determining the amount of professional liability coverage you need involves a careful assessment of your business. Insurance companies consider a range of features, such as:
- Profession
- Location
- Business activities
- Time in business
- Number of employees
- Prior claims
In some cases, clients may want you to carry a certain amount of professional liability coverage. It's important to review these contractual requirements before you start work.
Why choose professional liability coverage from Progressive Commercial?
For more than 50 years, small businesses have relied on Progressive Commercial for comprehensive insurance solutions, competitive pricing, and unparalleled service. Whether you're looking for a professional liability policy or a combination of coverages, our specialists are here to help.
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