What Is Professional Liability Insurance?

Professional Liability insurance is also known as Errors & Omissions insurance or E&O insurance. It's also referred to as medical malpractice insurance…depending on the profession and can help protect you and your business against actual or alleged negligence that may occur while providing your professional services. These claims can vary from giving incorrect advice or omitting a piece of information; to failing to deliver your service within a desired timeframe. Professional Liability coverage is useful for an array of business types throughout various industries. Some examples include engineers or designers that are sued by a client for misinterpreting renderings or miscalculating specs. Or project managers that are sued for project delays and cost overruns. A Massage therapist being sued by a client for purported tissue damage following a massage. And a medical billing employee sued for incorrectly coding a medical procedure on an insurance form. These are just a handful of scenarios in which professional liability insurance could help cover expenses & damages resulting from a negligence claim.
The majority of E&O policies are written on a “Claims-Made '' basis-which is fancy insurance lingo that means in order to get YOUR insurance benefits in a claim, your professional liability policy must be active when an alleged mistake occurs AND when the claim is filed. A Claims-made policy’s coverage kicks in only when you file a claim during the policy period. Your policy will also have a ‘retro-active date’ which confirms the policies original inception date. So for instance, say your retro-active date is 02/01/2015. That means you have had Professional Liability coverage since that date.
So how much coverage will you need? The basic or standard amount of coverage is typically $1M. But depending on the size of your business and your scope of services, you may need higher limits of $5M or maybe even $10M. Premiums for E&O policies will also depend on your industry type, the size of your business and the amount of coverage you actually need.
Not every industry requires professional liability coverage-a knowledgeable and trusted agent can help you determine if your business has an E&O exposure and the right amount of coverage needed.

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