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Professional Liability Insurance: Protecting Your Business

Monday, June 19, 2023

As business owners ourselves, we understand that you pour your heart and soul into your company and that risks and liabilities probably lay at the forefront of your mind. Your business is 100% worth protecting – especially in today’s complex and litigious business landscape. Whether you’re an established professional or just starting your own business, having the right insurance coverage is crucial. In this article, we’ll delve into the world of professional liability insurance, exploring who needs it, what it covers, and how much it costs.

Two businessmen in suits discuss a piece of paper.

What is Professional Liability Insurance?

There are various types of commercial insurance. General liability insurance, for instance, covers physical risks like property damage or bodily injuries. Professional liability insurance, however, covers a more abstract idea: various types of negligence, errors, and omissions. It offers protection against the types of claims that could arise for professional services rendered, whether or not the lawsuit is actually warranted. 

Who Needs Professional Liability Insurance?

Reputation impact and defense fees arising from a lawsuit can be costly enough to bankrupt a business. Professional liability insurance can be a key addition to your portfolio of coverage, particularly if you’re a small business owner and your business provides:

  • Professional advice to clients regularly (i.e., an attorney or consultant)
  • Professional services (i.e., an accountant or graphic designer)
  • Contractual services to your clients (i.e., an architect or event coordinator)

Professional liability insurance is a requirement for some jobs and contracts. This is because incidents that occur due to mistakes or faulty advice leading to financial or indirect loss to clients are typically not covered by other types of business insurance. Regardless of your level of experience or expertise, costly mistakes can happen. 

If your company operates exclusively online, you may benefit from various cyber-specific policies. 

What Does This Type of Insurance Cover?

While the specifics can vary depending on the policy, professional liability insurance typically covers the costs of protecting against claims from customers or clients. It can include coverage for claims arising from: 

  • Professional negligence
  • Errors
  • Omissions
  • Breach of duty
  • Misrepresentation
  • Copyright infringement 
  • Violation of good faith and fair dealing

This type of policy also covers the following:

  • Services that have been performed previously
  • Defense costs
  • Temporary staff and independent contractors

Is E&O Insurance the Same as Professional Liability?

Errors and omissions insurance, abbreviated as E&O insurance, and professional indemnity insurance are other names for professional liability insurance. These terms are often used interchangeably because they are, in fact, interchangeable.

What This Insurance Does NOT Cover

Professional liability insurance does not cover intentional or illegal acts, personal injuries, or property damage unrelated to professional services. Coverage for these occurrences would be through other types of commercial insurance

Professional Liability Insurance Cost

On average, the premium for professional liability coverage is around $60 per month. However, this cost can vary significantly based on factors such as: 

  • Nature of the profession
  • Level of risk involved
  • Coverage limits desired
  • Claims history of the individual or business

Typically, insurance providers assess each of these considerations and set the premium accordingly. 

Always consult multiple insurance providers to compare quotes and find the best coverage at a competitive price. Or choose an independent insurance agent! We can shop around with our insurance partners to find the best price and plan to suit the needs of your business.

Two men meet in a conference room.

How Long Does It Take to Get Professional Liability Insurance?

The timeline to get coverage typically depends on the individual or business seeking the coverage. The application process usually involves providing detailed information about the nature of the business, claims history, and desired coverage limits. 

Once the application is submitted, it can take anywhere from a few days to a few weeks to receive a quote and finalize the insurance policy. The timeline may vary based on the complexity of the situation and the need for additional underwriting or risk assessments.

At Independent Insurance Associates, we care about your big or small business. We take pride in customizing commercial insurance plans to meet the needs of each and every company allowing you to focus on delivering high-quality services with peace of mind. Contact us or get a free quote today!