Professional Liability Insurance
Professional Liability is a type of insurance that provides coverage for business professionals that offer service or advice to their clients. Examples of these types of businesses include, but are not limited to, lawyers, doctors, consultants, financial advisors, and life coaches.
What does a Professional Liability Policy Cover?
As with all insurance policies, coverage varies based on the terms and conditions outlined within each policy. It is important to understand your specific policy and to know what is covered, what is not covered, as well as your coverage limits.
With that being said, there are several things you can expect a professional liability policy to cover. Below is a list of things that are typically covered with a professional liability policy:
- Negligence
- Errors & Omissions
- Legal Defense Costs
- Court Costs (fees associated with legal procedures)
- Copyright/Trademark Infringement
- Misrepresentation
- Libel & Slander
This list is not conclusive, but should give you an idea of the type of things that are covered. For more information, please contact one of our agents.
Types of Businesses that typically need a Professional Liability Policy:
- Doctor (Malpractice Coverage)
- Lawyers
- Real Estate Agents
- Property Managers
- Home Designers
- Engineers
- Home Inspectors
- Business Consultants
- Accountants / CPA's / Bookkeepers
- Hair Stylists & Barbers
- Marketing Agencies
- Graphic Designers
- Architects
- Appraisal Services
How does a Professional Liability Policy Work?
A professional liability policy provides coverage for professionals who offer their clients advice or service. This protects them from claims of negligence arising out of these professional services. To get a more clear understanding of how a professional liability policy works, take a look at the two examples below.
Example 1
(Note: In this scenario, the insurance agent has the professional liability policy)
- A construction company contacts their insurance agent because they are required to have a Certificate (proof) of Insurance to start work on a specific job.
- The insurance agent does not issue the Certificate of Insurance in the timeline that they were supposed to.
- The construction company is now facing delays in starting the job, causing them to lose money on the job due to the insurance agent’s negligence.
- The agent is then sued by the construction company because the agent failed to fulfill their obligations as a professional
- The agent’s professional liability policy then comes into effect to pay for legal defense costs and damages paid to the construction company
In this example, if the insurance agent did not have a professional liability policy they would have to pay out of pocket for the entire situation.
Example 2
Let’s look at another example of when a professional liability policy would be crucial.
(Note: In this scenario, the personal trainer holds the professional liability policy)
- An overweight, 45-year-old man hires a personal trainer to lose weight.
- The personal trainer advises the man to go on a 7 day fast to lose weight.
- The man suffers health problems because of the personal trainer’s advice.
- The man then sues the personal trainer because their poor advice caused him to suffer health issues. (Due to the personal trainer’s credentials and profession, there are reasonable expectations that the trainer will provide sound advice to the client.)
- Because the personal trainer has a professional liability policy in place, the policy covers medical expenses to the man, legal defense costs, and damages paid to the man.
Similar to the first example, if the personal trainer did not have the right coverage they would be liable to pay out of pocket for all expenses.
Our Partner Companies:
Doesn't My General Liability policy cover this?
In short, no. Your general liability policy covers physical losses, such as property damage. A professional liability policy essentially covers your for the advice and service that you give to your clients.
To Summarize
A professional liability policy is a type of insurance for business professionals that offer their professional advice or service to people. A few examples of this would be stock brokers and doctors. This type of policy protects them from their customers suing them for things like negligence. The policy would help pay for things like defense costs, settlements and judgments.
Informational statements regarding insurance coverage are for general description purposes only. These statements do not amend, modify or supplement any insurance policy. Consult the actual policy or your agent for details regarding terms, conditions, coverage, exclusions, products, services and programs which may be available to you. Your eligibility for particular products and services is subject to the final determination of underwriting qualifications and acceptance by the insurance underwriting company providing such products or services. This website does not make any representations that coverage does or does not exist for any particular claim or loss, or type of claim or loss, under any policy. Whether coverage exists or does not exist for any particular claim or loss under any policy depends on the facts and circumstances involved in the claim or loss and all applicable policy wording.