What Professional Liability Insurance Is Right For You?

All professionals who provide a service or product that involves a loss risk should obtain professional liability insurance. This type of insurance, which is also referred to errors omissions insurance is designed to protect professionals or companies in the event that an error or omission causes loss of lives or property resulting in financial harm to the professional. Those who fall into this category include, but are not limited to, physicians, lawyers, real estate brokers, home inspectors, architects and management consultants. Any profession at risk for a client to file a lawsuit resulting in financial loss is at risk and should obtain professional liability insurance.


The most commonly known professional liability insurance is medical or malpractice insurance for physicians and hospitals. Other professionals who can be sued by their clients should be able to be sufficiently covered by general liability or errors omission’s insurance. This insurance coverage should protect the professional from financial loss due to failure to perform, and/or errors or omission of the products or services sold.

General liability insurance which covers bodily injury, property damage, personal injury and/or damages from false advertising or slander, is not always sufficient coverage for many professionals. General liability insurance usually has low coverage limits that do not include punitive damages. If the professional is successfully sued in excess of their coverage limit then they are responsible for the difference in what the insurance pays and the amount awarded by the courts.

The financial cost discourages many professionals from getting professional liability insurance. Here are three methods one can do to keep the cost down:

1) Practice good quality control. Professionals and companies that don’t have a history of lawsuits filed against them, pay a lower premium for professional liability insurance.

2) Lower your maximum coverage limit. The higher your coverage, the higher your premiums with be. The insured needs to consider perceived risk, the maximum amount that they could be sued for and not be put out of business, and find appropriate coverage for such.

3) Check financial statements. Research insurance companies and evaluate their financial ratings. Make sure you select an insurance company that is in good shape with a good reputation. It is not unheard of for an insurance company to not be able to meet their financial obligations when a claim is filed. This is information that can be obtained on line with sufficient research.

There are so many different policies and with different premiums and limitations it is easy to get confused. There is a difference in the types of professional liability insurances. An experienced independent insurance broker can help you make sense of all the information. Remember insurance agents that work for the insurance company may be helpful but their job is to keep your business with their insurance company so their information may be biased. So unless you have high confidence in your insurance agent it may be advantageous to consult an independent broker to learn what type and how much insurance is necessary for your profession.

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