Insurance & Risk Management
Specialized Insurance for Design Professionals
Professional Liability (E&O)
Professional Liability (Errors & Omissions) insurance covers liability from bodily injury and property damage arising out of the negligent act or omission of a professional (i.e. architect, engineer, surveyor, IT consultant, etc.) in performance of their professional services. Separate insurance for professional services is necessary because Professional Liability is usually excluded from General Liability policies.
There is often a misunderstanding between Professional Liability and General Liability insurance. This misunderstanding can even be seen in some contracts or agreements between you and your clients. Many times, agreements will include requirements that are appropriate for General Liability, such as naming your client as an “additional insured”, but are not appropriate or unavailable under the Professional Liability policy. This is why it is invaluable to have an experienced insurance agent on your team that can review your agreements in a timely manner and represent your best interests.
Another area of confusion between Professional Liability and General Liability is in how claims are reported. Most General Liability 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. Below is an example on which carrier responds under the different policy types:
Claims-Made—A new claim is filed in 2016 while XYZ Insurance Company’s policy is in effect. Therefore, XYZ Insurance Company would respond to the claim even if the insured was with a different insurance carrier back in 2005 when the event leading to the claim occurred.
Occurrence—The event leading to the claim occurred in 2005 while ABC Insurance Company’s policy was in effect. Thus, ABC Insurance Company’s would respond to the claim even though the insured is currently covered by XYZ Insurance Company when the claim is filed in 2016.
A key component of the Professional Liability (claims-made) policy is the Retroactive Date (Retro Date). The Retro Date shows “how far back” the coverage of a policy extends into the past. It is usually the first date that Professional Liability coverage was purchased and continuously renewed by the firm or individual.
You can feel comfortable switching professional liability carriers as long as the new carrier matches your current Retro Date and existing coverages (limits, deductible, endorsements, exclusions, etc.). This is another reason why having an experienced insurance agency on your team is invaluable to access specialty carriers and help you compare the various policy forms.
WHAT IS A
Not all policies are the same
Many Professional Liability policies only cover economic or financial losses of third parties. This is fine for many professionals like business consultants, real estate agents or accountants. However, professionals like architects and engineers require bodily injury (BI) and property damage (PD) coverage due to the nature of their services.
Understanding the differences in coverage between the various policy forms of carriers can be complicated. We have access to over twenty (20) professional liability carriers that have tailored policies for design professionals and consultants.
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We are an independent insurance agency which means we represent you, our client, instead of trying to push a particular carrier or product. We can provide you with clear choices from over 20 carriers that fit your needs. We only offer coverages from “A” rated carriers as classified by A.M. Best.