FAQs
Every business owner tries to run their company perfectly, but mistakes can happen. If they do and the mistake financially harms your client, it can lead to a lawsuit. Professional liability insurance can help protect your business if someone sues you for making a mistake in your professional services.
What is the difference between professional indemnity and general liability? ›
The difference between public liability and professional indemnity insurance is that public liability is tailored for claims by members of the public for injury, illness or damage while professional indemnity covers claims by clients for professional mistakes or negligence.
What is the difference between GL and E&O? ›
They offer different scopes of protection.
General liability lives up to its name – it's generalized liability coverage for lawsuits, property damage, and advertising injuries. E&O only covers lawsuits over the financial losses someone experienced because of your work.
What is professional liability in layman's terms? ›
Professional liability insurance covers you if claims are filed against you for professional negligence, errors, omissions, or other issues that can arise if you provide professional services for a living.
What are the two types of professional liability? ›
There are two types of professional liability polices: claims-made and occurrence. Most professional liability insurance policies are “claims-made,” meaning that the policy must be in effect both when the event took place and when a lawsuit is filed for a claim to be paid.
What triggers professional liability coverage? ›
Professional Liability Claims: Trigger of Coverage
In order to trigger coverage under a professional liability policy, there must be an allegation that you or your business made an error or omission in the course of rendering professional services that resulted in harm to a third party.
Does commercial general liability insurance cover negligence? ›
A Commercial General Liability (CGL) policy protects your business from financial loss should you be liable for property damage or personal and advertising injury caused by your services, business operations or your employees. It covers non-professional negligent acts.
Why do professionals need professional indemnity insurance? ›
This type of insurance responds to claims of negligence, oversights, malpractice, or errors your clients allege you committed while providing your services. If a client, or a former client, thinks that your bad advice caused them financial or reputational damage, they may choose to sue you.
Is professional liability the same as umbrella? ›
Professional Liability is usually not covered by Umbrella policies. Instead, policyholders will often purchase a primary Professional Liability policy and a separate Excess Policy.
Why is E&O insurance so expensive? ›
Location, especially if you're in a state with higher minimum coverage requirements. Claims loss history, because you can expect to pay higher E&O insurance rates if you have a history of lawsuits. Coverage limits, because policies with a higher limit are likely to cost more than policies with lower coverage limits.
Mistakes or errors in the professional services given to customers. Professional liability insurance can help cover your legal costs if a client sues you for a mistake in the services provided, such as bad advice given to a client or faulty workmanship.
Is E&O considered professional liability? ›
In most cases, the terms “E&O insurance” and “professional liability insurance” can be used interchangeably. Sometimes, the naming convention “malpractice insurance” is used – largely in the industries where the corresponding language is used in the claims.
What is professional liability insurance for dummies? ›
Professional liability insurance is the same as errors and omissions insurance. It's a form of small business insurance that covers your business against claims of mistakes in professional services, such as services that are inaccurate, late or never delivered. It covers your legal costs, judgments and settlements.
What is the professional liability limit? ›
When you get professional liability insurance coverage, you'll choose the coverage limits you want in your policy. These limits can range between $250,000 and $2 million. Generally, higher limits will increase your insurance cost.
What are the elements of professional liability? ›
The elements of a cause of action in tort for professional negligence are “(1) the duty of the professional to use such skill, prudence, and diligence as other members of his profession commonly possess and exercise; (2) a breach of that duty; (3) a proximate causal connection between the negligent conduct and the ...
Is liability insurance worth having? ›
Liability insurance is an essential coverage for small business owners. It helps protect you from claims that your business caused bodily injury and property damage. The importance of liability insurance is that every business faces claims that can come up during normal operations.
Should all healthcare professionals get professional liability insurance? ›
While not required in every state for every profession, if you provide health-related professional services, maintaining malpractice coverage can reduce your financial risk. Doctors and nurses are often serving on the frontline of healthcare and must make critical decisions, which can leave them open to lawsuits.
What happens if I don't have professional indemnity insurance? ›
What this means is that if you don't have professional indemnity insurance, the number of projects that you're able to work on is a lot more limited. If you're required to have professional indemnity insurance due to a contractual requirement, the contract will usually specify the minimum indemnity limit.
Why do accountants need professional liability insurance? ›
Professional liability insurance can help cover damages resulting from professional accounting services that may include tax preparation and planning, accounting services, business counseling, audit, and more. Having insurance in place can help firms manage their bottom line and protect their business.