Professional Liability Insurance is critical for professionals who provide a service to their clients and work directly with them. Professional Liability Insurance can help provide protection for claims made by a client if they suffer a financial loss due to a service being provided or failing to be provided. These claims could be due to a mistake you made, or simply by failing to perform certain services altogether, so having Professional Liability Insurance is essential.
Professional Liability Insurance is a claims-made policy, meaning the insured is covered as long as the alleged incident occurred at the time the policy was in place and reported during the policy term.
You may have also heard the phrase: Errors and Omissions Insurance, E&O Insurance, Professional Indemnity Insurance, Wrongful Acts Coverage
What does Professional Liability Insurance Cover?
Professional Liability insurance will cover a loss resulting from a wrongful act that took place and was reported during the term of the policy. If a professional either made or allegedly made, a mistake, misleading statement, or failed to perform certain services, Professional Liability Insurance would cover the costs associated with any damages. This may include inaccurate advice, documentation mistakes, misusing or poorly securing clients' information, exposing confidential data, professional negligence, or failing to deliver services as promised. Professional Liability Insurance could also cover the costs incurred to respond to a subpoena or required for a defense.
Here are a few examples:
- You order the wrong software for your client’s project that they are unable to return and get refunded for. Your client holds you accountable.
- Your client decides to take legal action and sue you due to a financial loss caused by your incomplete project.