What Is Professional Liability Insurance?

Most businesses have general liability insurance that protects your company (or the one you work for) from claims against bodily injury or property damage caused by the products or services provided. General liability also covers harm arising from daily operations.
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What Is Professional Liability Insurance?

Written by Brian Greenberg
CEO / Founder & Licensed Insurance Agent

Last updated: November 24th, 2022

Reviewed by Paige Geisler
Licensed Insurance Agent

However, general liability doesn’t usually cover claims against individuals in the company. If you work in a profession at high risk for lawsuits, you need more protection than general liability policies. That’s where professional liability insurance comes in.

What is a Professional Liability Insurance Policy?

A professional liability insurance policy protects individuals from specific claims and lawsuits resulting from services provided within their professional capacities. The policies are designed to protect an individual from damage to their personal life and finances. Each policy has its own guidelines on what is or is not covered. Claims resulting from purported negligence, misrepresentation, errors, and omissions are generally covered. The degree of coverage can vary drastically, so it’s critical to make sure the policy you purchase fits your needs exactly.

Some liabilities aren’t covered by most insurers but might be added using supplemental policies or endorsements in some situations. Items not usually covered by a base professional liability insurance might include:

  • Criminal prosecution
  • Any forms of legal liability (as outlined by civil law)
  • Data breaches
  • Technology issues
  • Liability claims arising for actions committed outside their profession

You’ll want to read your policy in detail to understand your actual coverage. Then, if you have questions, you should ask your insurance agent for clarification. They can pull up your specific policy to answer any questions.

Who Needs Professional Liability Insurance?

Any professional with expertise in a specific field or who runs their own business should invest in professional liability insurance. A few examples of these professions include:

  • Physicians: Anyone practicing medicine is at a high risk of malpractice lawsuits, which is essentially medical negligence. If a patient feels they were misdiagnosed, treated poorly, or suffered undue hardship after a procedure, they can sue in most states.
  • Lawyers: Lawyers are at a high risk of misrepresentation lawsuits, which happen when a client feels they lost a case or suffered legal consequences due to their attorney’s neglect, inattention, or misrepresentation of facts.
  • Accountants: If clients feel their accountant made an error or omitted crucial information from their financial documents (including tax filings), they might sue for damages. These damages can be levied against the accountant personally and can have a high cost.
  • Consultants: Customers who receive advice in any capacity from real estate agents, IT professionals, advertising agencies, and marketing companies have the potential to sue for damages. They can claim the advice they received was misinformed or otherwise, and the professions listed above all need to be protected by professional liability insurance.

Professional liability insurance offers full or partial protection against the claims and lawsuits described in each of these situations. This type of insurance pays the claimant up to the coverage amount being sued for. This insurance can also cover the costs of legal services and court fees. Any amount granted to the claimant that’s above the coverage limit will be left to be paid by the defendant. This is another important reason your coverage should fit your needs.

How Much Does Professional Liability Insurance Cost?

Professional liability insurance costs vary significantly based on your location, coverage, profession, and insurance provider. The higher the risk for loss, the higher the cost of the insurance will be. Since there are so many considerations, it’s essential you shop around before selecting a policy.

Is Errors and Omissions Insurance the Same as Professional Liability Insurance?

Yes, professional liability insurance is the same as errors and omissions. For physicians, this insurance can also be called malpractice insurance. Different states and companies have different titles for this type of coverage, so make sure to go over the policy thoroughly with your insurance agent.

How is Professional Liability Insurance Different From General Liability Insurance?

General liability insurance covers a company as an entity, whereas professional liability insurance covers the individual. A general liability policy might cover property or liability damages resulting from a product or service the company offers. However, it wouldn’t protect against a personal negligence claim against an individual. For example, a professional liability policy will protect against the errors and omissions of a single person, but it won’t cover injuries resulting from using the company’s products.

Where Can You Get a Professional Liability Insurance Policy?

Many major insurance providers offer professional liability insurance policies. A few examples of these companies include GEICO, Progressive, State Farm, AIG, and Next Insurance. Any one of these companies can provide you with a quote and limits to their specific policies.

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