Professional Liability Insurance

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Understanding Professional Liability Insurance Coverage

Professional liability insurance, also commonly referred to as errors and omissions insurance (E&O), is a fundamental policy for businesses delivering professional services to customers. Even with a great amount of experience and expertise, errors can occur, and if a client perceives such a mistake to have caused financial loss or property damage, they may pursue legal action against your business.

The Importance of Professional Liability Insurance

For businesses providing professional services, the absence of professional liability coverage can expose them to financial loss on claims stemming from real or even just perceived mistakes. Particularly for small business owners, obtaining professional liability coverage is paramount as it provides essential protection during challenging situations. This coverage is particularly crucial for those who:

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Provide professional services
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Offer advisory services to clients
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Are contractually obligated to maintain Professional Liability coverage
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Professional Liability Coverage Details

Professional Liability shields businesses from potential financial repercussions when errors occur in the professional services rendered to clients. Unlike other types of insurance policies, Professional Liability policies make payments on behalf of the Named Insured in the event they are held liable in the delivery of their professional service. The policy does not make payments to the Named Insured.

This allows clients and project owners to know that you have the financial capacity to stand behind your Professional Services.

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Who Requires Professional Liability Insurance?

While professional liability may not be required in some states, businesses offering professional services to customers should strongly consider obtaining professional liability insurance as a means of limiting their risk of financial loss in a claim (attorney fees, claims expenses & damages awarded). Additionally, there are times when some clients may require that you carry professional liability (E&O) as an insurance requirement in their contracts. This is especially true for architects, engineers, surveyors and environmental consultants.
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Industries Covered for Professional Liability Insurance

We specialize in providing professional liability insurance for a number of industries, to include but not limited to:

  • Architects
  • Engineers
  • Surveyors
  • Environmental Consultants
  • IT Firms
  • Interior Designers
  • Oil & Gas Consultants
  • Manufacturers
  • EPC Firms
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Professional Liability Insurance Cost Considerations

While minimum premiums can start at around $1,700 for small firms providing basic services, specific costs of professional liability insurance varies based on factors such as the specific professional service provided, gross revenues, project types, chosen coverage limits, and claims history.

Our seasoned risk managers are ready to assist you in determining the appropriate level and cost of professional liability insurance tailored to your specific business requirements. With over 150 years of collective expertise, we are dedicated to safeguarding your business with dependable professional liability insurance.

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Acquiring Coverage

At Risk Specialty Group, we streamline the process of obtaining professional liability quotes, ensuring convenience and accessibility for business owners seeking this protection.
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How Professional Liability Insurance Operates

There is often a misunderstanding between Professional Liability and General Liability insurance. Most General Liability insurance policies are written on an “occurrence” basis. Coverage on an occurrence policy is determined by the date that the situation giving rise to the claim occurred. Not when the claim is reported with the carrier.

Professional Liability policies are written on a “claims-made” basis. This difference is significant. Under a claims-made policy, the availability of coverage is determined by the date that a claim is first reported.

This is why it is invaluable to have an experienced insurance agent on your team that can help you understand the nuances between different insurance policies and how each policy can help you business.

Explore Our Professional Insurance Offerings

Professional Liability Insurance
Workers Compensation
Property
Automobile
Umbrella
Inland Marine (Equipment)
Pollution Liability
Crime
Bonds / Surety
Drones
Cyber Liability and Network Security
Directors & Officers (D&O)
Employment Practices Liability (EPL)
Fiduciary Liability
Kidnap & Ransom

10 FAQS about professional liability insurance:

What is professional liability insurance?
Professional liability insurance, also known as errors and omissions insurance, shields businesses from legal expenses and damages involving claims arising out of errors or mistakes made in the delivery of your professional services.
Why is professional liability insurance crucial for small businesses?
Professional liability insurance is vital for small businesses as it protects them from financial losses, such as legal expenses and damages resulting from claims of errors or omissions in their professional services.
Is professional liability insurance mandatory in Texas?
While not mandatory in Texas, professional liability insurance is highly recommended for businesses to safeguard against financial loss from expenses (attorney & court costs, damages awarded, etc.) involved in legal claims related to professional services.
Who are the leading professional liability insurance providers?
There are over 40 carriers that provide policies for Professional Liability depending on your industry. However, some of the leading carriers that provide professional liability for architects, engineers & surveyors are Travelers, RLI, Hudson, C.N.A, Liberty, & Berkshire Hathaway to name a few.
What does a professional liability insurance policy cover?
A professional liability insurance policy covers legal expenses, defense costs, attorney fees and settlements arising from claims of errors, omissions, or negligence in the delivery of professional services.
How does professional liability insurance differ from general liability?
General Liability provides more “premises” liability for slip and fall accidents in your office or claims made against your “products” or “completed operations”. This would include more physical risks associated with a product recall or the completion of a physical act, such as construction or installation. Professional liability is designed to cover claims related to professional services (such as the design of a building or the mapping of a plot of land).
What industries benefit from professional liability coverage?
There are many industries that benefit from carrying professional liability, such as architects, accountants, and attorneys. However, we specialize in providing professional liability to design professionals, which include architects, engineers, surveyors, environmental consultants, IT firms, oil & gas consultants and manufacturers.
Can professional liability insurance be customized?
Yes, professional liability insurance policies can be customized up to a point to meet the requirements and risk profiles of individual businesses, ensuring adequate protection against potential liabilities.
What does professional liability insurance coverage include for insurance professionals?
Insurance professionals’ professional liability coverage encompasses protection against claims of errors or negligence in providing insurance-related products & services, safeguarding the insurance agency against financial losses and legal expenses.
How can small businesses obtain professional liability insurance coverage?
Small businesses can acquire professional liability insurance through reputable insurance agents, such as our firm. Feel free to contact us today for your custom quote!

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