Professional Liability Insurance

If you’re a business owner or service provider, you can be sued for negligently performing services even if you haven’t made a mistake. You can protect your business by carrying Professional Liability Insurance, also known as errors and omissions insurance (E & O insurance) or professional indemnity insurance.

What does it cover?

• • Alleged or Actual Negligence: Humans make mistakes and knowing your business is protected from a slip up can offer tremendous peace of mind. A client could also potentially sue you for negligence based on their opinion. Either way, you’ll be protected.
    Here are some examples of this type of claim:
    • – An advertising agency runs an ad in a publication, but there’s a typo.
    • – A construction company orders the wrong materials, and they are unusable.
    • – A personal trainer gets sued when their client says they failed to stretch them properly during a session, leading to injury.
    • – A plumber comes to fix the garbage disposal, but his repairs cause the dishwasher to back up and flood the client’s kitchen.
  • Defense Costs: Having Professional Liability means you’ll be defended and, if needed, represented by an attorney during a claim.
    Here are some examples of this coverage:
    Real Estate Brokerage: An agent is sued for allegedly failing to disclose material defects of a property to the buyer before closing the sale;
    Cloud Services Consultant: A consultant recommends a technology stack to a company that results in systems not communicating and business grinding to a halt. A Professional Liability policy would pay for the fees for the defense of this case and cover the costs from any judgment.
  • Personal Injury: In this case, personal injury refers to injury to someone’s reputation through libel and slander, not bodily injury. If you or one of your colleagues is accused of saying something harmful and untrue about another business or individual, your business is eligible for protection with Professional Liability Insurance.
  • Copyright Infringement: Copyright infringement can involve a variety of alleged grievances, including stealing software code, copying a logo or using a protected trademark. This insurance is invaluable for graphic designers, advertisers and social media consultants who work in a creative field where originality can be tough to prove.
  • Temporary Staff and Independent Contractors: It can be a tremendous relief to know that your Professional Liability Insurance also extends to your independent contractors and temporary employees, not just you and your management team. For example, if you’re a photographer hired to shoot a campaign for a magazine, and your temporary assistant for the gig deletes all the image files before delivery, your insurance can provide business-saving coverage.
  • Claims from Past Services: Your policy may allow for a retroactive or retro date meaning that if your policy is current, it will cover you from alleged mistakes made in the past.
    For example, a digital marketing agency made a logo for a business several years ago. Recently a company came forward accusing the business of stealing their logo. Since the marketing agency provided it, they could be held liable for this long-ago mistake. However, as long as their policy is current and up-to-date, they would be eligible for protection.
  • Worldwide Coverage: Many businesses operate internationally, and this coverage also extends across the globe. Examples include:
    • – A personal stylist that travels internationally with their celebrity client
    • – A guru that talks about personal development on stages all over the world
    • – A business management consultant with clients in multiple countries
  • Claims and Damages: If you’ve been hired by a client to perform a specific task or meet a goal, and your work or recommendations fail, you could be liable for damages. You’ll be protected with Professional Liability Insurance through the entire process.
    Examples of these types of claims include:
    • – A Facebook media buyer runs a campaign but doesn’t generate the amount of ROI anticipated.
    • – A tutor is hired to help a student prepare for the SATs, but the student’s score is below average.

   

  Why does my company need it?

  Businesses that provide a service or offer advice to clients would be wise to have this insurance protection. There’s a lot of subjectivity that goes into business, and a lot of unpredictability, too. A client may try to hold you liable if they don’t get the results they expect, even if you did nothing wrong or the client fails in the implementation of your recommendations.

  And, of course, to err is human. If you have made a mistake, that can be even more costly to correct. Having a Professional Liability policy can help keep your company intact. In large scale cases, a business would also benefit from having Directors & Officers Insurance, which is payable to a company’s directors and officers to cover losses from defense costs and judgments.

  Claim examples – How the coverage works

  Professional liability claims can go to court. One case in 2009, Estate of Tinervin v. Nationwide Mutual Insurance Company, stemmed from a medical assistant misplacing a lab report and not showing results to a patient. The owner of the business is ultimately responsible for this mistake, but the damages will be covered by a Professional Liability Insurance policy.

  Why Click2bind for your professional liability insurance?

  As an independent agency, we have access to multiple carriers. We do all the research and comparison shopping for you, helping you lock in the most competitive prices while getting a plan that best fits your needs. We take a data-driven approach to find the perfect policy so that you have the coverage you need without paying for the things you don’t.

  Related articles

  What Does a Business Owners Policy Cover?
  Do I Need Directors and Officers Insurance?