BUSINESS INSURANCE • FLORIDA & TEXAS
Professional Liability Insurance
Learn how Professional Liability Insurance, also known as Errors & Omissions (E&O), can help protect businesses against certain claims arising from professional services, advice, errors, or omissions.
EMD INSURANCE RESOURCES
What Is Professional Liability Insurance?
Professional Liability Insurance, often called Errors & Omissions (E&O) insurance, is designed to help protect businesses against certain claims alleging that professional services, advice, recommendations, or work caused a client financial harm.
Even when a business believes it performed its services correctly, a client may allege that an error, omission, missed deadline, inaccurate advice, or failure to deliver a professional service as expected resulted in a financial loss. Professional liability insurance may help respond to covered claims and associated defense costs, subject to the policy's terms, conditions, exclusions, and limits.
Errors & Omissions
Professional liability insurance may help respond when a client alleges that an error, mistake, or omission in your professional services caused them financial harm.
Professional Negligence
Coverage may apply to certain claims alleging that your business failed to provide professional services with the level of care or expertise expected in your profession.
Advice & Recommendations
If clients rely on your professional advice, consulting, recommendations, designs, or other specialized knowledge, professional liability may help address certain claims alleging that your guidance resulted in financial loss.
Failure to Deliver Professional Services
A client may allege that your business failed to perform an agreed professional service, failed to meet professional expectations, or did not deliver services as represented. Professional liability may help respond to certain covered claims arising from those allegations.
Missed Deadlines
Depending on the circumstances and policy terms, professional liability may help address certain claims alleging that a professional error or failure to meet a deadline caused a client financial harm.
Defense Costs
Even when an allegation is disputed or ultimately determined to be unfounded, responding to a professional liability claim can involve significant legal expenses. Professional liability policies may provide coverage for defense costs associated with covered claims, subject to the policy's terms and limits.
KNOW THE DIFFERENCE
What Professional Liability Typically Does Not Cover
Professional liability is designed primarily for claims arising from professional services, errors, omissions, or advice. Other business exposures generally require different types of insurance coverage.
Bodily Injury & Property Damage
Claims involving third-party bodily injury or property damage are generally addressed by General Liability insurance rather than professional liability, although coverage can vary depending on the profession, policy, and circumstances of the claim.
Employee Injuries
Work-related injuries or illnesses involving employees are generally addressed through Workers' Compensation insurance, subject to applicable state requirements and policy terms.
Business-Owned Vehicles
Liability arising from the ownership or use of business-owned vehicles generally requires Commercial Auto insurance.
Your Own Business Property
Damage to your building, furniture, equipment, inventory, or other business property generally requires Commercial Property coverage or coverage available through a Business Owners Policy (BOP).
Cyber & Data Breach Exposures
Cyberattacks, data breaches, ransomware, privacy incidents, and many other technology-related losses may require specialized Cyber Liability coverage.
HOW COVERAGE WORKS
Understanding Professional Liability Policies
Professional liability policies can work differently from many other types of business insurance. Understanding how claims are reported, when coverage applies, and how policy limits work can be especially important when evaluating E&O coverage.
Claims-Made Coverage
Many professional liability policies are written on a claims-made basis. Generally, this means the policy in effect when a claim is made may respond, provided the claim and the circumstances giving rise to it meet the policy's coverage requirements.
Retroactive Date & Prior Acts
A professional liability policy may include a retroactive date that determines how far back covered professional services can have occurred. Maintaining continuous coverage can be important because a gap in coverage or change in the retroactive date may affect protection for prior work.
Reporting Claims & Circumstances
Professional liability policies may contain specific requirements for reporting claims or circumstances that could reasonably lead to a claim. Businesses should review their policy's reporting provisions and notify their insurance professional or carrier promptly when a potential claim arises.
Per-Claim & Aggregate Limits
Professional liability policies commonly include a limit that applies to an individual claim and an aggregate limit that applies across covered claims during the policy period. How defense costs affect those limits can vary by policy, so reviewing the specific policy terms is important.
EXPLORE YOUR COVERAGE
Not Sure What Other Coverage Your Business May Need?
Professional Liability is only one part of a business insurance program. Answer a few questions about how your business operates to explore other coverage types that may be worth considering.
Have an Insurance Question?
Resources are a great place to start. When you're ready to discuss your specific insurance needs, EMD Insurance Solutions is here to help.