What Is Professional Liability Insurance Coverage?
What Is Professional Liability Insurance Coverage? Professional liability insurance aka errors & omissions (E&O) insurance is a type of liability coverage designed to protect traditional professionals (e.g., accountants, attorneys) and other professionals (e.g., human resource consultants, management consultants etc.) against liability incurred as a result of errors and omissions in performing their professional services.
What Does Professional Liability Insurance Coverage Cover & Exclude?
Although there are a few exceptions (e.g., physicians, architects, and engineers), most professional liability insurance policies only cover economic or financial losses suffered by third parties, as opposed to bodily injury (BI) and property damage (PD) claims. This is because the latter two types of loss are typically covered under commercial general liability (CGL) policies. The vast majority of professional liability insurance policies are written with claims-made coverage triggers. In addition, professional liability policies often contain what are known as “shrinking limits,” meaning that unlike CGL policies (where defence costs are paid in addition to policy limits), the insurer’s payment of defence costs reduces available policy limits.
Accordingly, when attempting to determine appropriate policy limits, insureds must consider the fact that because defence costs are often a high proportion of any claim settlement or judgment, they must usually purchase additional limits. The most common exclusions in professional liability policy forms are for bodily injury (BI), property damage (PD), and intentional/dishonest acts.
Does Our Company Need Professional Liability Insurance?
To determine whether or not your organization needs professional liability insurance you first need to determine whether any part of your operations could be defined as providing a service to a third party for a fee. If the answer to that question is ” Yes” then you should connect with an ALIGNED Advocate to discuss your operations and needs in more detail.
An ALIGNED Insurance Broker can help explain your questions like “what is the professional liability insurance coverage?” and provide expert guidance about professional liability insurance as well as risk management best practices for your organization. Talk to one of our insurance brokers today about how we can help you secure the best products, services and insurance solutions for your business.
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100% Canadian owned, ALIGNED is a premiere insurance brokerage that serves more than 1,400 clients across the country. ALIGNED’s offices in Toronto, Calgary and Vancouver are supported by a national operations centre in Cambridge, Ontario. Uniquely within the industry, ALIGNED creates, negotiates and delivers the best business insurance and risk management strategies/solutions to organizations like yours.