Professional Liability Insurance
Avanta Seguros offers tailored coverage to safeguard your reputation and finances against lawsuits and liability risks.
What is Professional Liability Insurance?
Professional liability insurance is essential for businesses that provide expert advice or services. It protects your business from claims of negligence or substandard work, often referred to as errors and omissions (E&O) insurance.
Experts, such as attorneys, consultants, and other professionals, need this coverage because mistakes in their work could result in financial or indirect loss for their clients. Unlike other types of business insurance, professional liability insurance covers these specific risks.
What Does Professional Liability Insurance Cover?
Professional liability insurance covers claims related to mistakes or negligence in the services your business provides. Whether or not you made an error, this coverage can help pay for damages and legal defense costs, up to your policy limits. Typical situations include:
- Negligence and Mistakes: Protection against claims of errors or oversights in your professional work.
- Incorrect Advice: If your advice leads to financial loss for a client.
- Misrepresentation: Covers instances where your business is accused of providing false or misleading information.
- Copyright Infringement: Protects against claims of intellectual property violations.
- Personal Injury: Coverage for injuries caused by your professional services.
- Failure to Deliver a Service: If your business is accused of not fulfilling its services as promised.
By having professional liability insurance, you can safeguard your reputation and build trust with your customers.
What Professional Liability Insurance Doesn’t Cover
While professional liability insurance provides essential protection, there are certain exclusions. Typically, small business professional liability insurance does not cover:
Property Damage
Damage to your own or others’ property.
Bodily Injury
Physical injury, which is typically covered by general liability insurance.
Intentional Acts
Claims arising from intentional or fraudulent actions.
Employee Injuries
Injuries that occur in the workplace are covered by workers’ compensation, not professional liability.
Cyber Incidents
Protection against cyber-related risks is generally not included.
Contractual Liability:
Liabilities arising from specific contracts are not covered.
How Does Professional Liability Insurance Work?
Most professional liability policies are written on claims-made forms, meaning the coverage only applies to claims filed during the policy period. However, you can add a retroactive date to your policy to cover incidents that occurred before your coverage began.
This type of insurance not only protects against claims from past services but also offers global coverage for your business’s activities anywhere in the world. If you need to file a claim, simply contact your provider and explain the incident in detail.
Who Needs Professional Liability Insurance?
If your business provides professional services or advice, professional liability insurance is crucial. It helps protect you against lawsuits resulting from mistakes or oversights in your work.
In some cases, certain states or professional bodies may require specific professionals, such as lawyers or real estate agents, to carry this insurance before they can operate. Clients may also demand proof of coverage as part of their contracts.
Industries that benefit from professional liability insurance include:
- Consultants
- Attorneys
- Engineers
- Architects
- Real Estate Agents
- Insurance Agents
- Accountants
- Home Inspectors
Common Questions About Professional Liability Insurance
Is Errors and Omissions (E&O) Insurance the Same as Professional Liability?
Yes, errors and omissions (E&O) insurance and professional liability insurance are essentially the same. The terms are often used interchangeably.
Is a Professional Liability Policy the Same as Indemnity Insurance?
Professional liability is a specific form of indemnity insurance designed for businesses that provide services or advice. While indemnity insurance covers a broader range of scenarios, professional liability insurance focuses on claims related to errors or negligence in your work.
When is Professional Liability Insurance Required?
Depending on your profession, location, and clients, you might need professional liability insurance. Some clients require proof of coverage before entering into contracts, and certain states mandate it for specific professions. Always check your local laws and business contracts to ensure you’re covered.
What’s the Difference Between Professional Liability and General Liability?
Professional liability covers claims related to negligence in advice or services, such as a lawyer making an error in counsel or a consultant’s advice leading to financial loss. General liability insurance, on the other hand, protects against physical injury or property damage to third parties, like a customer slipping on your premises.
Will Professional Liability Insurance Cover Me Even if the Lawsuit is Baseless?
Yes, professional liability insurance can protect your business against frivolous or unsupported claims of negligence.
Does Professional Liability Insurance Cover Employees and Subcontractors?
Typically, professional liability insurance covers employees working on behalf of your business. However, subcontractors may need to purchase their own professional liability coverage.
Coverage for Your Advice and Services
Stay protected from claims of negligence, errors, or omissions in your professional services.
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