professional liability insurance

Professional Liability

Are you a doctor, a nurse, or any other kind of health professional?

Or are you a lawyer, architect, IT consultant, insurance agent, business consultant, or similar professional who is primarily responsible for providing advice or guidance-focused service?

Or are you a social worker, therapist, counselor, or in a related role?

Or are you studying to become any of the above?

Then you need to look into getting professional liability insurance.

Even students (think law students, medical students, and MBA students) may need to ensure they are covered under professional liability insurance if they are working with clients and training under professionals.

What is Professional Liability Insurance?

Professional liability insurance is a type of insurance designed to protect business owners if a client or customer is harmed or owed damages because of their professional advice or service.

It is also referred as Errors & Omissions insurance or E&O insurance, and is usually carried along with general liability insurance.

This type of insurance is often required or at least recommended for professional service providers and advising or advice-giving businesses (lawyers, counselors, medical professionals, etc.).

What Does Professional Liability Insurance Protect You From?

Professional liability insurance helps protect you and your practice or business against damages or lawsuits due to work mistakes, undelivered services, personal injury (e.g. libel or slander), the actions of employees, temporary staff, and contractors, and alleged or actual negligent services.

However, professional liability insurance does not protect you from damages due to intentional wrongdoing, bodily harm, illegal acts, false advertising, property damage, general liability (but general liability insurance covers those), or employee injuries (workers compensation and employment practices insurance cover those respectively).

Professional liability or E&O insurance generally covers court costs, legal defense fees, and settlements up to the amount specified in your individual insurance policy.

Depending on your location and profession, you may be required to carry professional liability or errors and omissions insurance.

Why Do You Need Professional Liability Insurance?

Who needs professional liability insurance?

Many different types of professionals need professional liability insurance for various reasons.

Doctors, nurses, pharmacists, physical therapists, and other medical professionals will likely require malpractice insurance, which is a form of professional liability insurance.

Optometrists and dentists likely need professional liability insurance geared specifically towards those specialties, as do social workers, counselors, and therapists.

Attorneys or lawyers, accountants, architects, IT consultants, business consultants of all varieties, and those in related professions often require professional liability insurance.

Any job where you provide strategic advice and guidance most likely requires both general liability and professional liability or E&O insurance in order to help handle any lawsuits and cover the costs of damages or settlements as well as legal fees.

Lawsuits happen to even the best and most experienced professionals, so it is best to be prepared – and insured.

You should know that in a given year, more than 1 in 5 businesses face the sort of incident or issue that can lead to professional liability lawsuits.

Moreover, a small business lawsuit can cost anywhere from several thousand dollars to upwards of 6 figures or more – not to mention the stress and interruption in business operations that a lawsuit can cause.

Even the most baseless or seemingly pointless claims can tie you up in an endless legal battle, and having professional liability insurance can help you mitigate these issues and costs.

How Do You Choose the Right Type of Professional Liability Insurance?

Your profession and the associated risks mean that you need different types of professional liability insurance.

For instance, doctors, nurses, and other medical professionals usually need to carry malpractice insurance in order to protect themselves if a procedure, treatment, prescription, or other advice goes badly or a patient is able to prove a mistake or negligence.

Lawyers, consultants, architects, and other professionals may need more general E&O insurance or insurance specifically designed for their practice or profession.

Your insurance agent can help to advise you as to the type of professional liability insurance, general liability insurance, and any other insurance, riders, or endorsements that you need to carry in order to protect your finances.

What is the Difference Between Professional Liability Insurance, General Liability, and Management Liability Insurance?

Professional liability insurance is designed to protect individual business owners or professionals, while management liability insurance is a package of insurance policies designed to protect the owners, management, and directors and officers of a corporate entity.

The difference between general liability insurance versus professional liability insurance is also essential to understand; professional liability or E&O insurance covers negligence as it pertains to professional services provided, while general liability covers legal fees and other costs associated with your claims of third-party bodily injury as well as property damage.

What Other Types of Insurance Are Related to Professional Liability Insurance?

General liability insurance is typically carried along with professional liability insurance in order to ensure the most complete coverage.

Medical professionals need malpractice insurance – which is a type of professional liability insurance but is often described separately, and lawyers or attorneys need professional liability insurance that is specialized with a claims-made coverage trigger.

Contact an ASCO Insurance specialist to learn more about the best professional liability insurance plans for you.