Professional liability insurance
Professional liability insurance
This policy, also known as errors and omissions insurance, protects businesses against client lawsuits claiming that work was unsatisfactory, negligent, late, or never completed.
Does your small business need professional liability insurance?
Professional liability insurance is designed for businesses that make a living off their expertise.
Even the most experienced and thorough professional service provider makes mistakes. Unfortunately, clients may not be so understanding if your error costs them considerable time or revenue.
Professional liability insurance coverage helps protect you from unsatisfied clients. For example, if you miss a project deadline, make an omission in your work, or provide ineffective business advice, your client may sue.
If you’re served with this type of lawsuit, your professional liability insurance policy will cover legal defense costs up to your policy limit.
What does professional liability insurance cover?
- Work errors and oversights
- Undelivered services
- Incomplete work
- Missed deadlines
- Budget overruns
- Breach of contract
- Accusations of negligence
Will clients require you to have professional liability insurance?
Yes, clients may request a certificate of insurance as proof that you have coverage. They want peace of mind that if you don’t meet their standards, they can recoup their losses.
Maintaining your professional liability coverage offers you the same assurance.
Many professional liability insurance policies are written on a “claims-made” basis with a retroactive date. This means that in order to collect your insurance benefits, your professional liability policy must be active:
- When an alleged mistake occurs, and
- When the claim is filed
With a claims-made professional liability policy, your coverage kicks in only when you file a claim during the policy period. Continuous coverage is key if you don't want to pay out of pocket for lawsuits.
How much does professional liability insurance cost?
The median cost of a professional liability insurance policy is $59 per month, or $708 a year. More than 80% of businesses pay $1,400 or less for an annual policy.
The cost of professional liability insurance is based on several factors, including:
- Policy limits
- Deductible
- Level of risk
- Business experience
- Past coverage
Is there a difference between errors and omissions insurance and professional liability insurance?
The short answer is no. Different industries use different terms for the same type of coverage.
Professional liability insurance and errors and omissions (E&O) insurance are essentially identical, except for the name. Learn more about E&O insurance for small businesses.
What's the difference between general liability insurance and professional liability insurance?
General liability insurance and professional liability insurance both protect against common small business liability claims, but they cover different types of lawsuits.
A general liability policy covers customer bodily injuries, customer property damage, and advertising injuries. In contrast, professional liability insurance covers any legal defense costs when a client or customer suffers a financial loss due to your professional services or advice.
You can bundle general liability insurance with commercial property insurance in a business owner's policy (BOP). By bundling the two together, you can save money.
Get free quotes for professional liability policies with TechInsurance
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