What Is Professional Liability Insurance?

Professional Liability Insurance (also known as Errors & Omissions or E&O) protects businesses that provide services to customers from financial loss resulting from mistakes, misrepresentation and inaccurate advice. It is a type of business insurance that differs from general liability or commercial property policies, which cover physical losses such as bodily injury or property damage.

Errors & Omissions

Errors and omissions insurance, also known as E&O or professional liability insurance, protects your business from claims made by clients over unsatisfactory work. It covers your legal costs and any settlements or judgments awarded against you up to the policy limits, as well as associated expenses such as interruption fees and lost revenue. Generally speaking, all businesses that provide professional services or advice need some form of errors and omissions coverage. In some industries, such as law and medicine, it may be legally required.

Professional liability policies are often referred to as malpractice insurance, but they’re essentially the same type of coverage. Depending on the industry and the type of work your company does, a specific policy can be tailored to meet the needs of your business. For example, a printer would need a different policy than an electrician.

The main difference is that a malpractice policy typically covers incidents that occur while a professional is performing their duty, such as making a mistake during a consultation or failing to deliver on a promise. A professional liability policy, on the other hand, is intended to cover allegations of negligence or mistakes related to the work your business does as a whole, such as misrepresentation or inaccurate advice.

Regardless of whether a claim is valid or not, the cost of defending against it can quickly deplete your business’s resources. Fortunately, most errors and omissions policies include coverage for legal fees and related expenses up to the policy limit. This means that you can avoid costly lawsuits that could ultimately put your business out of business.

Most policies are claims-made, meaning that you must have a policy in place when a claim is made against you. This is why it’s important to continually renew your professional liability policy. Some policies are retroactive to a specific date, which allows them to cover allegations of mistakes that occurred prior to the effective start date of your policy. However, it’s important to note that a claims-made policy will only respond to incidents that are reported within the claims-made reporting period.

Professional Liability Limits

As with other types of insurance, there are a variety of limit and deductible options for Professional Liability Insurance. These choices can significantly impact the premium your business pays.

As a result, comparing limits across providers is essential to getting the right amount of coverage for your specific needs. The wording of different policies might appear similar and may even be identical, but it’s important to read the fine print carefully. If you have any questions about the limits of your policy or how they apply to certain situations, talk with a licensed insurance agent who is familiar with this type of insurance.

Most businesses that offer professional services and advice should consider carrying this coverage, which protects them against financial damage caused by a mistake or oversight. It’s also a requirement in some states and healthcare settings for doctors to carry malpractice insurance.

The cost of professional liability can vary depending on the industry, state, risk class and coverage limits. For this reason, it’s important to get a quote from a provider to find out how much it will cost your business. A knowledgeable insurance agent will be able to help you select the appropriate limits for your needs and discuss the available discounts.

Truck brokers, like all other professionals, should have a policy that covers them against claims for negligence in their service delivery. Professional liability can provide protection for a range of issues, including cargo loss and property damage. It can also cover legal fees and judgements.

For most truckers, the best way to get this coverage is through payroll deduction. If your company offers this option, it’s important to set up a payroll deduction through your servicing human resources office (SHRO). You must then ensure that biweekly payroll deductions are made and that the SHRO receives the Professional Liability Insurance Reimbursement Claim Form and all required documentation in a timely manner.

Professional Liability Insurance is an affordable and necessary protection for any trucking business. To learn more about how it can protect your business, contact a Liability Insurance Agency insurance broker today.

Excess Limits

As its name indicates, excess liability insurance provides coverage limits that are higher than those of the primary liability policy. An excess policy may also offer coverage that applies to multiple underlying policies. It is often purchased in units called “coverage per occurrence” or “coverage per accident.” For example, if your underlying business general liability policy has a limit of $1 million, an excess policy could increase that to $3 million. Excess insurance is often paired with other types of liability coverage, such as commercial auto or EPLI.

The cost of excess insurance depends on many different factors, including the risk level and industry affiliation of the company in question. A newer company will typically have a higher insurance cost than an established firm that has been in business for years. The location of the company can also affect costs. For example, legal expenses in some states are higher than others, and this can influence the cost of the policy.

Getting the right amount of professional liability insurance is a matter of balance. Too little will leave your company vulnerable to financial ruin, while too much can be prohibitively expensive.

As a rule, the higher the limits in your policy, the more expensive it will be. The decision of how high to set your limits will be influenced by the risks associated with your business, as well as current jury awards for similar claims in your industry.

In addition to choosing the coverage limit, you will also choose your policy deductible when purchasing professional liability insurance. The deductible is the amount you will be responsible for paying before the insurance coverage begins to pay on a claim. Generally, the lower your deductible, the more you will save on your premium.

Some companies purchase an excess liability insurance policy because they want to protect themselves against a catastrophic loss. For example, a crash involving multiple deaths and injuries or significant property/infrastructure damage could easily exhaust the minimum limits required by law. For this reason, some trucking companies carry excess liability to help protect themselves against such a catastrophe.

Coverage Endorsements

Commercial general liability insurance provides a solid foundation for any business’s risk management portfolio, but it is not designed to cover every potential peril that might arise. That is why insurance endorsements exist – they allow you to customize your policy with specific coverage for unique situations. These are typically voluntary and based on your discretion, but they can also be mandated by legal or contractual obligations.

Insurance endorsements can modify or expand the coverage provided by a commercial liability policy, or they may change the way your premium is calculated. They can include industry-specific enhancements, extra parties included in the definition of “insured,” additional locations covered by the policy, or loss payees named in the policy. Some are drafted by the insurance company with adjustments to their standard templates, while others are customized by the insured with a more tailored approach.

For example, one common endorsement is the primary non-contributory language. This means that if another policy covers a claim under its terms, your commercial liability policy must pay first (the primary policy) without seeking contribution from other policies that also make this claim (non-contributory). It’s a useful way to ensure that you don’t have any gaps in your coverage, and it can also help you meet certain contractual requirements.

Another useful option is to add a professional services exclusion to your policy. This limits your coverage to financial damages arising from the advice and guidance you provide, as opposed to physical property damage or bodily injury. This is useful if you have contracting partners that require this type of insurance in their contracts, or if your business offers services in other areas that would not be covered by the typical commercial liability policy.

Other common coverage endorsements include a detailed description of your deductible types (first dollar vs. shared cost) and listing past firm entity names (in the event of a merger or rebrand). There are also special environmental coverage endorsements that will list the types of pollution that you are covered for under your policy. It’s important to talk with your agent about the specific coverage you need to ensure that your entire operation is protected.