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Professional Liability Insurance Tips

  • Errors and Omissions policies are usually issued on a "claims made" basis. For a claim to be covered, the alleged error or omission must be covered by the policy and must have occurred on or after the retroactive date of coverage, but before the policy's expiration date; and the claim must be made while the policy is still in force. To ensure protection, you must continue your coverage long after your engagement is complete.
  • E&O insurance doesn't protect you if you should get sued for something like stealing a client's customer away. For these types of situations, you may wish to create a contract that outlines procedures for conflict resolution and clearly states your and your client's rights.
  • The chance of getting sued often has less to do with the quality of your work than with your clients' temperament and expectations. If your client relationship goes sour for any reason, you could be accused of negligence even if you didn't make any mistakes. That's why it's so important to carry professional liability insurance, even if you've never been sued.

What Is Professional Liability Insurance, or Errors & Omissions Insurance?

While general liability insurance is primarily focused on property damage or bodily injury, errors and omissions insurance, also called professional liability insurance, protects you if a client claims that your services caused them to suffer a financial loss.

Many professional services companies choose to purchase E&O insurance policies, which are typically issued in increments of $1 million and have per-claim deductibles ranging from $1,000 to $25,000.

Some insurance companies are reluctant to issue professional liability policies, while others specialize in policies for specific professions. Because we have access to multiple insurance carriers and work with a wide range of small business professionals, we know how to find E&O insurance coverage that is comprehensive and yet fits your small business’s budget.

It’s important to note that almost all professional liability insurance policies are sold on a “claims-made” basis. This means that the insurance only covers work performed while the policy is in force, and for claims actually filed during the term of the policy. If you cancel your E&O insurance policy without arranging for an extended reporting period, your coverage would end, and any claims submitted after the cancellation would not be covered, even though the work was performed while the policy was in effect.

It’s also important to know that there are exclusions in every errors and omissions insurance policy. Before you purchase this type of policy, you’ll want to think about the most dangerous threats and professional risks for your business, and look for a policy that covers those specific risks.

We’re happy to help with your assessment. Feel free to call our licensed agents to learn how others in your profession have protected themselves. Or fill in our online application to receive a quote on a professional liability insurance policy that fits your small business’s needs.

How does professional liability insurance protect your business?

No one expects to make an error or omission that harms a client. But mistakes do happen. And even if you’re not at fault, a disgruntled client could bring a lawsuit against you. Many honest, hard-working business owners have been ruined by lawsuits that, although unjustified, diverted the owner’s time and resources away from running the business.

When you have professional liability insurance, any lawsuit should trigger a call to the agents at Business Insurance Now, who will work with you to initiate the claim. You can return to the priorities of running your business, confident that the insurance company, which would have to pay any judgment against you (up to policy limits), will be protecting your mutual best interests throughout every step of the legal process.

Get a FREE professional liability insurance quote now!


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