What is professional liability insurance?
Professional liability insurance, also known as errors and omissions (E&O) insurance, is a type of coverage designed to protect professionals from liability arising from their professional services. This provides financial protection if a client alleges that a professional’s work or advice was negligent, contained errors, or failed to meet agreed standards.
This insurance is essential for people in a variety of professions, including doctors, lawyers, architects, consultants, and other service professionals. This typically covers the legal costs, settlements and judgments that may arise from such claims and helps professionals deal with the potential financial burden associated with legal action.
How much does professional liability insurance cost?
The cost of professional liability insurance varies depending on the type of job you have, the size of your business, and the level of coverage you want. However, insurance premiums are typically relatively inexpensive, ranging from a few hundred dollars to a few thousand dollars per year.
Here are some examples of average annual premiums for professional liability insurance:
- Accountant: $300 – $1,500
- Architect: $500 – $2,500
- Engineer: $700 – $3,500
- Attorney: $1,000 – $5,000
- Doctor: $2,000 – $10,000
- Consultant: $1,500 – $7,500
- Insurance Agent: $500 – $2,500
- Real estate agent: $300 – $1,500
- Financial Advisor: $700 – $3,500
- Teacher: $200 – $1,000
- Therapist: $400 – $2,000
These are just averages, your actual premiums may be higher or lower depending on your individual circumstances. It is important to get quotes from several insurance companies before choosing a policy.
Some factors that can affect the cost of professional liability insurance include:
Types of Jobs: Some jobs are more likely to be sued than others. For example, doctors and lawyers are more likely to be sued than accountants and teachers.
Size of business: Large businesses typically pay higher premiums than small businesses.
Level of coverage desired: Policies with higher coverage limits typically have higher premiums.
Business’s claims history: Businesses with a claims history typically pay higher premiums.
If you’re worried about the cost of professional liability insurance, there are a few things you can do to reduce your premiums.
Choose a policy with lower coverage limits.
Increase your deductible.
Bundle professional liability insurance with other types of business insurance.
Get quotes from multiple insurance companies.
Maintain a good billing history.
Professional liability insurance is an important investment for every professional. It can help protect you from the financial consequences of a lawsuit. By understanding the factors that affect the cost of insurance, you can choose an insurance product that provides the coverage you need at an affordable price.
Professional liability insurance for individuals
Personal professional liability insurance is a type of insurance that protects individuals from lawsuits arising from their professional actions. This type of insurance can be important to individuals in a variety of occupations, including:
Freelance: Freelancers often work with clients on a contractual basis and may be held liable for mistakes or omissions during the work. Professional liability insurance can help freelancers cover the costs of defending against lawsuits and resulting settlements or judgments.
Consultants: Consultants provide advice and expertise to businesses and individuals and may be held liable for any incorrect advice they provide. Professional liability insurance can help consultants cover the costs of defending a lawsuit and any resulting settlement or judgment.
Contractors: Contractors perform work on behalf of businesses and individuals and can be held liable for defects in the work. Professional liability insurance can help contractors cover the costs of defending a lawsuit and any resulting settlement or judgment.
Real Estate Brokers: Real estate brokers help clients buy and sell real estate and can be held liable for misrepresentations or omissions in their dealings with their clients. Professional liability insurance can help real estate agents cover the costs of defending a lawsuit and any resulting settlement or judgment.
Social Media Influencers: Social media influencers often promote products and services to their followers and can be held liable for false or misleading statements they make. Professional liability insurance can help social media influencers cover the costs of defending themselves against lawsuits and resulting settlements or judgments.
Professional liability insurance providers
There are numerous insurance providers that offer professional liability insurance. Provider availability may vary depending on your location, occupation, and specific coverage needs. Some of the popular insurance companies that offer professional liability insurance are:
Hiscox: Hiscox is known for offering a variety of business insurance products, including professional liability insurance for a variety of occupations.
Chubb: Chubb is a large insurance company that provides professional liability insurance to individuals and businesses across a variety of industries.
Travelers: Travel Insurance offers professional liability insurance for a wide range of professionals, including consultants, technical experts and more.
CNA: CNA provides insurance solutions, including professional liability coverage, for professionals in a variety of fields.
Liberty Mutual: Liberty Mutual offers professional liability insurance to protect individuals and businesses from claims related to professional services.
Nationwide: Nationwide Insurance offers professional liability coverage tailored to the needs of specific professions.
When looking for professional liability insurance, it’s important to compare quotes, coverage options, and policy terms from different providers to find the one that best suits your specific needs and circumstances. Additionally, consider seeking recommendations from industry peers or consulting with an insurance broker to explore available options.
Professional liability insurance examples
of course. Let’s look at a few examples to explain how professional liability insurance works.
Medical Malpractice Insurance: When a doctor misdiagnoses a patient and administers the wrong treatment. The patient suffered harm and as a result decided to sue the doctor for medical malpractice. In this case, malpractice insurance, a specific form of professional liability insurance for medical professionals, covers legal costs, settlements, or judgments associated with the claim.
Errors and Omissions (E&O) Insurance for Consultants: Management consultants provide clients with advice on business strategies. However, the client claims that the consultant’s advice resulted in financial loss. If your consultant carries errors and omissions insurance, this may cover the costs of defending such claims and any damages paid to the client.
Legal malpractice insurance: When a lawyer fails to submit important documents within a set deadline, causing damage to the client’s case. The client sues the attorney for legal malpractice. Legal malpractice insurance helps cover legal costs and potential damages arising from a lawsuit.
These examples highlight how professional liability insurance can step in to protect individuals in a variety of professions when errors, omissions or negligence result from professional services, leading to legal claims.