Professional Liability Insurance

Professional Liability Insurance

Financial protection for claims alleging negligence or failure to deliver a service as promised.

Protect your practice with Professional Liability Insurance.

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Claims Examples

Coverage

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.

Coverage

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 Insurance covers the legal expenses and settlement fees, totalling $190,000.

Coverage

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.

Professional Liability Insurance, Explained.

What does Professional Liability Insurance cover?

 Professional Liability Insurance, also known as Errors and Omissions Insurance, protects professionals from client claims alleging financial loss due to a service you provided, as well as lawsuits alleging negligence, misconduct, and failure to deliver services as promised.

Professional Liability Insurance typically includes coverage for legal costs and damages related to the following coverage areas:

  • Professional Services: Coverage for Negligent Acts or errors or omissions related to your services, or failure to deliver a service as promised.
  • Products: Coverage for product failure (e.g., it didn’t work as intended) or a physical injury (e.g., overheating device causing a burn).
  • Media and Advertising: Media services resulting in your client getting sued for defamation, libel, or slander.

What is the cost of Professional Liability Insurance?

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:

  • Industry and Services Offered
  • Years of Experience
  • Number of Employees
  • Annual and Projected Revenue

In the online quote application, we ask your business some questions to understand your coverage needs better.

Who needs Professional Liability Insurance?

You need Professional Liability Insurance if:

  • 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, carrying Professional Liability Insurance is required to practice.

What is the difference between General Liability insurance and Professional Liability insurance?

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 by Professional Liability Insurance?

Professional Liability Insurance typically 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.

Frequently Asked Questions about Professional Liability Insurance

Why do I need professional liability coverage in addition to commercial general liability coverage?

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?

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?

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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