What Is Professional Liability Insurance?

Professional liability insurance might not be the first thing you think about when running a business, but it can be a game-changer in protecting your reputation and finances. Mistakes or unexpected claims can happen, no matter how careful you are. This policy may help you manage the financial fallout, giving you room to focus on what you do best.

Who Needs Professional Liability Insurance? 

Professional liability insurance, often called errors and omissions (E&O) insurance, is valuable for a wide range of professionals. Consultants, attorneys, accountants, architects and IT specialists are just a few examples of those who may benefit from coverage. Professionals who provide advice, handle sensitive information or have a duty of care to clients are particularly vulnerable to claims that could arise from unintentional errors or perceived lapses in service. 

What Does It Cover? 

Professional liability insurance may provide financial aid in various situations where errors or omissions might lead to legal disputes. It may cover legal fees, settlements and judgments related to claims of negligence, misrepresentation or contract breaches. It may also cover defense costs even if the claim is groundless. 

The following are examples of situations that an E&O policy may cover: 

• Negligence in providing services (e.g., A consultant or accountant makes an error in their advice, causing financial loss to a client.) 
• Breach of contract (e.g., A lawyer fails to meet the terms of a contract or misses a deadline, leading to legal consequences or financial loss for a client.) 
• Inaccurate advice or recommendations (e.g., A financial planner’s poor investment advice resulted in losses and the client sued for damages.) 
• Failure to deliver services (e.g., An architect or contractor fails to complete a project on time or to the required standard, resulting in client losses.) 
• Defamation or misrepresentation (e.g., A marketing professional is accused of making false statements about a competitor that harm their business.)  
• Mistakes in medical practice (e.g., A doctor or a nurse errs in diagnosis or treatment that leads to patient harm.) 

Contact Us 

If you’re a professional looking to secure financial protection, contact FLM Insurance today. Let our agents help you find the ideal professional liability policy.  

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.