The Many Names of Professional Liability Insurance
Professional Liability Insurance goes by many names – depending on the industry you work in, it may be called Errors and Omissions Insurance or Malpractice Insurance.
Whatever you call it, Professional Liability Insurance provides the same lawsuit protection for small-business owners. When clients sue you over errors in your work, Professional Liability Insurance can help protect your business.
What’s in a Name? Professional Liability Insurance vs. E&O vs. Malpractice
Why does Professional Liability Insurance have so many names? Different industries have different naming conventions when it comes to this type of small business insurance:
- Doctors and lawyers call this coverage Malpractice Insurance.
- IT professionals and real estate agents typically call it Errors and Omissions.
- Consultants, architects, and engineers usually call it Professional Liability Insurance.
Of course, there’s nothing wrong with calling your insurance any of these names. What matters is how these policies cover professional lawsuits.
Does Professional Liability Insurance Work Differently for Different Industries?
Professional Liability Insurance goes by different names in different industries, but for the most part, it covers the same type of risks – professional mistakes.
That means that whether you’re a doctor, IT professional, or architect, your Errors and Omissions Insurance can cover lawsuits if a client alleges you goofed.
Of course, different industries have different risks:
- IT professionals need to be concerned about data liabilities.
- Architects worry about buildings listing on a crooked foundation.
- Doctors face unease about misdiagnoses.
Because it covers different lawsuits for different industries, you could say that Professional Liability Insurance works differently based on the lawsuit risks at your company.
Why Name Confusion Might Strike at Your Small Business
Say a client emails you and says they need to see your “professional indemnity insurance certificate.” You might be thinking, ‘What the heck is that?’ Sometimes a client will use obscure names for your coverage requirements. Or a client’s lawyers might be using terminology from another industry in your contract.
As a business owner, you can make things easier for yourself by remembering that Professional Liability Insurance, Errors and Omissions, Professional Indemnity, and Malpractice Insurance are all names for the same thing.
The important thing to keep track of is the amount of coverage the client requires. The most common policy we sell to IT professionals has coverage for $1 million worth of Professional Liability claims. It’s a good bet your clients will require a policy in that range, regardless of what they call the policy itself.
What’s the Difference between Professional Liability and General Liability?
It’s worth pointing out that there are other insurance policies out there that have different names and offer you vastly different coverage.
Chief among these is General Liability Insurance. General Liability covers third-party lawsuits about injuries and property damage. This doesn’t include coverage for mistakes you make as an IT professional.
While there are many synonyms for Professional Liability, remember that General and Professional Liability are two very different areas of insurance. Only Professional Liability Insurance offers protection against lawsuits from clients who have suffered a financial loss as the result of the work you performed.