What is professional liability insurance?
Professional liability insurance provides coverage for legal liability claims arising out of the rendering or failure to render professional services. It is also commonly referred to as Errors and Omissions Liability.
Professional Liability was designed to respond to losses resulting from the errors and omissions of individuals or firms providing professional services for a fee. Examples are architects, engineers, environmental consultants, lawyers, medical professionals, accountants and insurance brokers.
Professional Liability Insurance vs. Malpractice Insurance
Professional liability insurance is also referred to as malpractice insurance. These policies provide first dollar defence costs when allegations of malpractice are brought forward. Malpractice insurance is commonly used by medical and legal professions to help cover loss of earnings when requested to attend discoveries, mediation and/ or trial as part of the defence of a claim.
Who needs professional liability insurance?
All professional service providers should carry one form or another of professional liability insurance. Mistakes happen, so it is important to arm your business with a specifically tailored liability insurance policy.
The following service professionals most commonly need professional liability insurance:
- Doctors
- Nurses
- Dentists
- Lawyers
- Realtors
- Engineers
- Architects
- Property managers
- Athletic trainers
- Bookkeepers
- Consultants
What does professional liability insurance cover?
Professional liability insurance provides coverage for the alleged financial loss (up to policy limits) suffered by a third party arising out of the rendering or failure to render professional services, as well as defence costs incurred to defend the allegations.
A few examples of what professional liability insurance covers include claims of:
- professional negligence
- misrepresentation
- failure to meet industry standards
- mistakes or omissions
Benefits of Professional Liability Insurance
Professional liability insurance can be considered the most important form of insurance purchased by professionals. Losses of this nature are generally excluded from commercial general liability. As such, professional liability is critical to the ongoing operation of any business rendering professional services or advice. Coverage includes legal defence costs, which can be considerable in these situations.
How much professional liability insurance do I need?
While there is no general rule of thumb, professional liability insurance policy should generally protect for at least $ 2,000,000. The amount and type of coverage will depend on the nature of your business and the scope of operations that you are involved in.
For example, if your business is one that comes with a low risk of accusations of malpractice, such as a retail environment, you may decide you need less professional liability coverage.
On the other hand, professionals such as dentists or doctors, who deal with more critical subject matter such as physical therapy or medicine, would be best served with more coverage.
How much does professional liability insurance cost?
The cost of Professional Liability policies can vary considerably, depending on a number of factors. To obtain accurate costs, you need to speak with one of our brokers.
In general, the cost of a professional liability insurance policy is affected by:
- industry risks
- business size
- coverage limits
- deductibles
- claims history
How To Get Professional Liability Insurance
For those rendering professional services and advice, Professional Liability insurance should form part of your business insurance program. Simply give one of our Edmonton-based insurance agents a call today.
Professional Liability Insurance: The Bottom Line
Professional Liability insurance doesn’t speak negatively to your business practices. It doesn’t mean that you are expecting to commit malpractice, that you’re avoiding responsibility for a misconduct suit, or admitting guilt when you’ve done no wrong. It simply means that you’re preparing for the worst-case scenario. As a business owner, it is prudent to protect yourself so that you can continue to operate your business in the event of a malpractice suit. Looking for a quote on Professional Liability Insurance? Call one of our brokers today for a quote.
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