Professional Liability Insurance
Professional liability insurance coverage can be important for your business.
If your client or customer thinks you made a mistake when advising them professionally, they can sue you. Even a lawsuit without merit is expensive and time-consuming, and if you are found negligent, the costs can be high. Professional liability insurance can help protect you and your company from these types of negligence claims.
Who Needs to Carry Professional Liability Insurance?
Professional liability coverage is a wise investment for many different types of professionals, including:
- Advertising agents
- Insurance agents
- Interior designers
When doctors purchase specialized professional liability insurance, it is referred to as medical malpractice insurance.
Sometimes you may be bound by contract to purchase professional liability coverage. It can depend on your business and client – read contracts carefully to ensure you have the right insurance coverage in place when signing a new client. This insurance coverage adds an extra layer of protection on top of your other commercial policies, so it can be helpful even without contractual obligation.
What Do Professional Liability Insurance Policies Cover?
Professional liability insurance policies provide coverage for economic losses and financial damages suffered by a third party due to negligence. Bodily injury and property damage are often excluded from professional liability policies – those damages are usually covered already by the Commercial General Liability (CGL) policy in force for the business.
Professional liability insurance helps to protect you from claims made by third parties alleging negligence, inaccurate advice, misrepresentation, and good faith violations. The insurance provides coverage both for damages and your defense costs.
Professional liability coverage is often written on a claims-made trigger basis. This means the claim is triggered by a claim made during the coverage period rather than occurrence-based policies, which are triggered by the date of the occurrence itself. Ask your agent for more help understanding the claims-made basis.
Common Exclusions on Professional Liability Insurance Policies
Professional liability policies often exclude intentional acts, criminal or illegal acts, malicious or dishonest acts, bodily injury, and property damage. Because of the nature of their work, professional liability policies for doctors, engineers, and architects do usually include bodily injury coverage in addition to financial loss suffered by a third party.
Data breaches and other cyber events have traditionally been excluded from professional liability policies, but some policies are now being written with cyber coverage included. Suppose your professional liability insurance policy does not include coverage for cyber incidents and data breaches. In that case, you may want to consider a separate Cyber Liability policy to fill that coverage gap.
How Much Do Professional Liability Insurance Policies Cost?
The cost of a professional liability insurance policy depends on many different factors.
- The Type of Business you Operate: Different businesses have different exposure levels to risk. The type of business you operate can affect the price of your insurance coverage. For example, a therapist who sees many different patients each day may have a higher exposure to professional liability risk than a realtor who sells one house per month.
- Where Your Business is Located: Your location can play a role in the price of many different insurance coverages, including your professional liability insurance.
- The Number of Employees you Have: Businesses with no employees often have less exposure to risk than those with many employees. Therefore, the premium cost is likely to be less.
- How Much Coverage Your Business Needs: The coverage limits and deductible you select will play a role in your rate. Higher limits and lower deductibles tend to equate to higher premiums. Your agent can help you determine the right level of coverage for your needs. Be sure to retain a deductible you can afford to pay if you need to file a claim.
Insurance coverage is a necessary business expense to consider. Make sure you budget for the coverage you need and plan for the risks your business faces.
How Do I Purchase Professional Liability Insurance Coverage?
Ask your agent or go online to compare your rates and options. Many carriers sell professional liability coverage. If you already have a commercial general liability policy, ask your insurance company if they also sell professional liability insurance, or errors and omissions. We can help you find the best rate and options to protect your business.