Professional Liability Insurance, also known as errors and omissions insurance, protects professionals from client claims alleging financial loss due to a service you provided and lawsuits alleging negligence, misconduct, and failure to deliver services as promised.
This policy typically includes coverage for legal costs and damages related to the following areas:
Professional Services: Coverage for Negligent Acts or errors or omissions related to your services or failure to deliver a service as promised.
Media and Advertising: Media services provided that resulted in your client getting sued for defamation, libel, or slander.
How much does it cost?
For a basic Professional Liability Insurance policy with a limit of $100,000, you can anticipate spending approximately $250 annually.
The following factors are typically taken into consideration when determining the cost of your premium:
You provide advice or offer services in exchange for a fee.
You provide or develop products or devices.
Depending on the profession, it may be referred to as Errors and Omissions Insurance or Malpractice Insurance. For some occupations, is required to this coverage to practice legally.
What is the difference between General Liability and Professional Liability?
Professional Liability Insurance covers lawsuits alleging neglect, misconduct, or failure to deliver services promised, whereas commercial general liability insurance covers third-party property damage or bodily injury.
Having both CGL and PLI in your coverage, they form a comprehensive insurance policy package.
When is Professional Liability Insurance required?
Professional Liability Insurance is not required by all professions to offer services; however, it’s recommended for professionals who provide a service or advice, whether they work within a group of professionals or as solo entrepreneurs, as it protects against costs associated with claims or lawsuits that may threaten the survival of your business. When it comes to deciding whether or not to insure your business, consider your profession.
For example, accountants are required to carry professional liability insurance to practice in Ontario.
What is not covered?
Typically PLI does not provide coverage for:
Criminal, dishonest, or fraudulent acts (you need Crime Insurance);
Violation of securities acts;
Cost guarantees or price estimates; or,
Incorrect estimates of profits or economic returns.
Problem: You are an accountant, and you accidentally make an administrative error, which results in your client owing a large amount of money in taxes.
Outcome: Your client sues you for negligence. Your Professional Liability Insurance covers the legal expenses and monetary judgment, totalling $250,000.
Problem: A marketing strategy you developed for a client that promises a large ROI but doesn’t end up delivering the results.
Outcome: Your client sues you for financial loss. Your Professional Liability policy covers the legal expenses and settlement fees, totalling $190,000.
Problem: When reviewing your client’s health history, you notice an injury that may be aggravated by the treatment you provide. You proceed, exacerbating the old wound.
Outcome: The client sues you for negligence. Your PLI covers the defence costs, medical fees, and monetary judgment, totalling $56,000.
Frequently asked questions
Why do I need professional liability coverage in addition to commercial general liability coverage?Zensurance
Insurance policies are created with the intent of covering a large number of business segments. Every business is unique as to what they offer and how they are operated, due to these individual complexities it is almost impossible for one single insurance policy to cover everything a business may offer. Your basic insurance policy, Commercial General Liability covers any claims of your business causing injury or loss whether it be to a customer, tenant, or landlord. These policies do not, however, cover your professional advice and services, management decisions, physical property, computer systems, data and other potential loss exposures that might exist within your business model.
How much professional liability coverage do I need?Zensurance
The most common professional liability coverage that business owners, consultants or practitioners opt for is the $1M/$2M coverage ($1M max pay out for a single claim during a year, $2M max pay out for all claims throughout a year). If you believe risks are higher in your industry or for your specific business, you should consult with your broker about getting a policy with higher limits.
Does professional liability insurance cover errors and omissions?Zensurance
Yes. professional liability insurance covers errors and omissions in the service or advice provided by professionals. In fact, the terms ‘professional liability insurance’ and ‘errors and omissions insurance’ actually refer to the same type of policy.
Other business insurance coverage options to consider:
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During my Professional Liability (E&O) insurance purchase I dealt with Keagan. He made the process fast and easy. I got exactly what I wanted for a reasonable price.
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I had to obtain $2M Professional Liability / Errors and Omissions insurance (software consultancy) on very short notice. After filling out a few different quotes, I happened upon Zensurance who were significantly cheaper than other Canadian options.Justin Tisdale was assigned as my broker and was extremely responsive, attentive, and professional throughout our interactions. I would strongly recommend using him if you are in a similar situation.
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I had to get professional liability insurance and got quotes from multiple brokers who quoted crazy prices with no cancellation policies and bad customer service. Zensurance has been amazing, and their policy ended up being half the price as other quotes I got! It’s been super easy to work with them, and the next time I need insurance I’ll definitely be going to Zensurance first.
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