Professional Liability Insurance
If you are a professional, such as an architect, physician, lawyer, accountant, home inspector, or engineer, you should consider obtaining a particular kind of small business insurance, known as professional liability insurance. This insurance, also known as "errors and omissions" or “professional indemnity insurance” protects professionals against lawsuits related to alleged errors, negligence, malpractice, and omissions.
For some professions, the law requires professional liability insurance coverage, in addition to general liability insurance. Doctors and dentists must meet this requirement in many states. In other cases, clients may require that business owners and practitioners hold this insurance. For example, if you are a software developer, your employer may require you to have professional liability insurance.
Professional liability insurance is a type of small business insurance that protects against lawsuits related to your profession. If a claim is filed, the insurer must pay for the defense of the insured person. The insurer may settle the claim out of court if the policy owner agrees. However, if it goes to court and a judgment is rendered, the insurer will pay for the judgment up to the amount set in the policy. If the insurance company refuses to pay a judgment for a valid claim, the policy owner can sue the insurance company for breach of contract.
Professionals need professional liability insurance because a general liability insurance policy only covers personal injury, property damage, or advertising injury claims. Professional services can lead to other types of claims, including negligence, inaccurate advice, misrepresentation, violation of faith, and unfair practices. If an attorney fails to perform legal services with an adequate amount of skill, knowledge, and diligence, then his or her client could file a claim, which would then only be covered by professional liability insurance.
Professional liability insurance only covers claims made during the policy period. If a professional submits a claim related to an incident that occurred before the policy was purchased, that claim may not be covered. However, if you cancel your policy and someone later files a claim against you for an incident or complaint that occurred while you held the policy, the insurance company may not cover it. This is why it is important not to cancel your policy. If you happen to be sued after the fact and you have cancelled your policy, then you will be held liable as though you never had this policy.
Small Business Insurance Directory