Professional liability insurance is coverage for businesses that protect against claims from their clients. Professional liability insurance commonly covers negligence, copyright infringement, personal injury, and more. This can include damages caused by things you did and/or things that you should have done.
A variety of E&O coverages are available for small businesses, including:
E&O insurance can also offer coverage for claims from services provided in the past and work performed anywhere in the world.
Ultimately, anyone can sue your business if they feel they have suffered a loss due to your services—actual or perceived. For example, a real estate agent could get sued by a client who feels the loss of a property acquisition was a direct result of the agent's mismanagement. Making sure your business is protected in these instances may prevent financial hardship.
Let's look at a few other real life examples. Let's say you're a project manager. You accidentally forget to get to tell your client about needed sign offs causing project delays that increase the cost. Or maybe you're a massage therapist and your client sues you, claiming you caused tissue damage. These are just a few of the cases that professional liability insurance could help you with. Many people often pair it with general liability insurance for more complete coverage.
You should consider professional liability insurance if your business provides:
Yes, there’s no difference between errors and omissions insurance (E&O insurance) and professional liability insurance; the two terms are often used interchangeably.
Yes. Regardless of whether a claim against you is determined to be frivolous or not, your professional liability coverage would defend against a lawsuit claiming your professional neglect.
General liability coverage only protects against “third-party” damages for which you’re responsible (i.e. bodily injury to others or damage to their property ). Professional liability protects you from claims of neglect or professional errors.
Generally, any business which offers advice or provides a service needs an errors and omissions policy. Occupations that require E&O insurance typically include:
In addition, business partners and licensing boards may require errors and omissions insurance by contract.
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