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Business Insurance Products

Professional Liability / Errors and Omissions Insurance

What Is Professional Liability Insurance?

Also known as Errors and Omissions insurance, Professional Liability insurance protects you and your company in the event a client alleges they have suffered a financial loss or other injury as a result of an error or an omission committed by you in the delivery of your professional services as promised in your contract .

Professional Liability coverage is separate from a General Liability (GL) policy which would cover you mainly for bodily injury or property damage liability.

If you are a subcontractor working on a client site, your client may require that you provide proof of General Liability and Professional Liability insurance.

Most businesses and industry groups can be covered under an Errors and Omissions policy.

Why Do I Need Professional Liability Insurance?

Your business may provide a highly specialized service that many of your clients don't fully understand. At the same time, the projects you work on may be highly sensitive and critically important to your client's business. Mistakes can happen in the course of providing your services to your client. This risk opens you up to litigation over allegations such as:

  • Error, omission, or negligence in providing a service


  • Failure to provide a service


  • Fraud


  • Improper documentation


  • Malpractice


  • Mismanagement


  • Misrepresentation of the facts


  • Non-disclosure


  • Violation of state and federal law (e.g. securities violations, violation of right to privacy,…)


  • Other allegations

You may think your General Liability insurance policy covers such instances, but that is not the case. General Liability insurance covers claims of bodily injury and property damage only, and typically excludes coverage for claims related to the delivery of professional services. Companies who have General Liability without Professional Liability/Errors and Omissions Insurance coverage are taking a serious risk. It's like a doctor practicing medicine without Malpractice Insurance.

Whether a claim is baseless or not, mounting a legal defense can bankrupt your company. Professional Liability insurance protects your company and your future by responding to professional liability claims and helping you keep your business operating as potential lawsuits move through the courts. Without Professional Liability insurance, your company could be financially overwhelmed.

What To Look for in a Professional Liability Insurance Policy

Be sure your Professional Liability policy includes the following key features:

  • Coverage that includes legal defense costs. Professional Liability insurance should pay for any resulting judgments against you, including court costs up to your policy’s coverage limits.


  • Coverage that extends to both W2 employees and 1099 subcontractors. Professional Liability insurance should protect your company from claims resulting from the work done by 1099 subcontractors on your behalf. However, 1099 personnel need their own errors and omissions insurance because your Professional Liability insurance policy may not defend them if they are sued separately or in addition to you.


  • Optional coverage for allegations of copyright infringement and intellectual property infringement. As part of your Professional Liability insurance policy, intellectual property infringement coverage protects you against claims alleging copyright infringement. Software, systems or processes are some of the most commonly known "intellectual properties."


  • Personal injury coverage. Having personal injury coverage as part of your Professional Liability insurance policy protects you against claims of libel, slander and invasion of privacy.


  • Worldwide coverage if the suit is brought in the United States. Be sure to ask if your Professional Liability insurance covers such litigation

It is very important for you to be aware that virtually all professional liability insurance policies are issued on a claims-made basis. That means that coverage is only provided for work that is done during the policy period and for claims that are filed (made) during the policy period. In effect, if an E&O insurance policy is cancelled, and no provision is made for an extended reporting period, then all coverage stops and it is as if you never had a policy.

Completing Your Package:

Professional Liability insurance is often not comprehensive enough to cover every eventuality, and other insurance plans are required for complete protection. Most business owners who purchase Professional Liability insurance from Ben Lau Insurance Agency also purchase:

  • General Liability


  • Errors and Omissions


  • Commercial Auto


  • Group Health


  • Group Life


  • Directors and Officers Coverage


  • Umbrella Policies



For more information please call us at (415) 876-5440.  You can request a free quote here.

 

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