Professional liability insurance is meant for companies that rely on their knowledge to make a career. Even the most seasoned and meticulous professional service provider makes errors. Clients, on the other hand, may not be so understanding if your error costs them a lot of time or money. Unsatisfied clients are covered by professional liability insurance. Your client may sue you if you miss a project deadline, make an error in your work, or provide inefficient business advice. Your professional liability insurance coverage will pay legal defense costs up to the policy limit if you are served with this type of litigation.
What Is Professional Liability Insurance?
Professional liability insurance (PLI) covers professionals such as accountants, lawyers, and physicians from claims brought by their clients for negligence or other reasons. Because general liability insurance policies do not cover claims stemming from business or professional practices such as carelessness, malpractice, or misrepresentation, professionals who have expertise in a certain area require this form of insurance.
Overview
Professional liability insurance is known by several names depending on the profession, such as medical malpractice insurance for doctors and errors & omissions insurance for real estate agents. Professional liability insurance is a unique type of coverage that is not available through homeowners’ endorsements, in-home business policies, or company owners’ policies. Only claims made within the insurance period are covered.
Professional liability insurance policies are typically written on a claims-made basis, meaning that coverage is only valid for claims filed within the policy period. Typical professional liability insurance will indemnify the insured against loss resulting from any claim or claims made during the policy period as a result of any covered error, omission, or negligent act performed during the policy period in the course of the insured’s professional business. Although some policies may include a retroactive date, incidents that occurred before the coverage was activated may not be covered.
Professional Liability Policy Wording
Some professional liability insurance companies’ policies are more restrictive than others. While some insurance wordings are required to meet a certain minimum acceptable wording, making comparisons easier, others range substantially in the coverages they give. Breach of duty, for example, may be included if the incident occurred during the policy period and was reported to the insurer by the policyholder.
Non-lawyers may be by terms with significant legal differences. For example, “negligent act, error, or omission” coverage protects the policyholder from losses/circumstances suffered solely as a result of a professional error or omission, or negligent act (i.e., the modifier “negligent” does not apply to all three categories, though any non-legal reader might assume that it did). A “negligent act, negligent error, or negligent omission” provision, on the other hand, is a far more restrictive policy, denying coverage in a case asserting a non-negligent error or omission.
Professional liability insurance companies
Accidents happen all the time, and business owners must be covered in the event of one in the workplace, especially since the typical customer injury insurance claim is $35,000. 1 It’s critical for business owners to protect themselves by ensuring they have the insurance they need to cover all of the hazards that their company faces. After all, not having the correct kinds of insurance is the same as not having any at all, leaving firms vulnerable to a variety of losses.
To find the companies that best suit the needs of small businesses, we analyzed more than a dozen of the country’s leading insurance companies as well as many brokers based on the types of coverage they offer, the sectors they service, their financial stability ratings, and customer satisfaction.
#1. State Farm
Because it offers numerous types of coverage through a nationwide network of agents. We chose State Farm as the best overall small business insurance carrier. Furthermore, because State Farm representatives are also business owners, they are familiar with the needs of other small business owners.
G.J. Mecherle, a retired farmer and insurance salesman, founded State Farm in 1922. State Farm has around 100 products, including financial services, banking, and commercial insurance. While it is best for auto and home insurance. AM Best has given it an A++ rating for financial stability.
State Farm sells insurance in most states and has policies for every step of a business’s growth cycle. Including general liability, professional liability, and other forms of coverage that can be to policies to meet specific needs. State Farm also provides business insurance tailored to certain businesses like contractors, professional services, restaurants, and shops.
Aside from business insurance, State Farm offers discounts to policyholders who bundle specific forms of coverage. Albeit the benefits vary depending on the types of coverage packaged. Bundling business coverage does not qualify for the reductions. If you’re content with your State Farm business-coverage, you could save money by getting home and auto insurance through them. Because each State Farm agency is private, each agent is familiar with the particular demands of small business owners because they are also business owners.
#2. Hiscox
Hiscox wins the top spot for independent contractors because they have products designed and priced specifically for independent contractors and freelancers.
Also, They began as an underwriter in Lloyd’s market in 1901. Although Hiscox Group’s parent business is in Bermuda, the company’s U.S. headquarters are in Atlanta, Georgia, and it has ten locations across the country. Hiscox operates in 14 countries and all 50 states. As well as the District of Columbia, though it does not offer small business insurance in Alaska.
Commercial general liability, professional liability insurance companies, business owners’ policies (BOPs), workers’ compensation, cyber liability, commercial auto, and employment practices liability insurance are among the products by Hiscox (EPLI). The firm also writes all of GEICO’s commercial insurance coverage.
Standard liability coverage limits at Hiscox are up to $2 million, with greater levels available with underwriting clearance. The firm offers coverage for a wide range of sectors and insurance types. Salons, fitness instructors, consultants, therapists, janitors, and acupuncturists are among the 180+ businesses that can benefit from customized solutions.
#3. Nationwide
We chose Nationwide as our best general liability provider because it is a business insurance carrier that focuses on basic, clear insurance solutions. Which is appropriate for companies with high-risk general liability requirements. AM Best also gave Nationwide an A++ Superior rating for financial soundness.
Farm Bureau Mutual Automobile Insurance Company, which was founded in 1926, was the forerunner to Nationwide. During its efforts to expand coverage to all states from coast to coast. The company changed its name Nationwide in 1955. Except for Hawaii and Alaska, every state has an agent.
In addition to general liability, Nationwide also provides commercial property, commercial auto, business interruption, BOP, workers’ compensation, EPLI, equipment breakdown coverage, and umbrella insurance. Retailers, professional offices, including medical clinics, food and beverage enterprises, and farms and ranches are among the company’s 14 industry specialties.
#4. The Hartford
Because of the unique benefits, it provides employers with pay-as-you-go programs. We chose The Hartford as our top workers’ compensation supplier. Expenses are based on real wages rather than estimates, these plans dramatically reduce the chances of overpaying or underpaying premiums.
Because of the unique benefits, it provides employers with pay-as-you-go programs. We chose The Hartford as our top workers’ compensation supplier. Expenses are based on real wages rather than estimates, these plans dramatically reduce the chances of overpaying or underpaying premiums.
- Access to The Hartford’s Preferred Medical Provider Network with over a million healthcare providers
- Prescription drug features
- The Nursed Back to Health Program
The Hartford’s customers, as the company is the second-largest provider of workers’ comp insurance nationwide.
#5. Travelers
Travelers was our best commercial property insurer because it has vast expertise in the industry. Having been voted the top commercial property insurance company in the United States by premiums written for numerous years and narrowly missing out on a first place in 2020.
This is another illustrious corporation with roots dating back to 1864 when one of its founders began selling two-cent accident insurance. The current company was created in 2004 when Travelers and St. Paul Companies merged, and it has an A++ rating from AM Best.7
Travelers offer insurance solutions for businesses in more than 20 industries, including transportation, manufacturing, construction, retail, and government agencies. However, the firm has acquired a strong reputation in the field of commercial property insurance.
According to the Insurance Information Institute, the company writes so much property insurance that it is the number one writer of commercial property insurance in the United States in 2020.
6 Other types of business insurance offered by the corporation include commercial car, cyber liability, surety bonds, and workers’ compensation, with pricing varying by industry.
Travelers are well-suited to provide coverage for companies that conduct business worldwide because it operates in the United States, Canada, and the United Kingdom.
#6. Liberty Mutual
We chose Liberty Mutual as the best insurer for BOPs because the company offers a quick and simple approach. As well as a simplified business owner’s policy that combines coverage in one cost-effective policy for a variety of sectors.
Liberty Mutual was chosen as the finest provider of business owners’ plans (BOPs). Which combine numerous types of coverage into a single policy to protect against liability, property loss, and income loss. This is in a unique position to assist a huge number of business owners across a wide range of industries.
Liberty Mutual provides commercial insurance through independent agents all throughout the United States. Commercial auto, equipment breakdown, inland marine, umbrella coverage, and workers’ compensation are among the coverage options. As are 11 industry-specific solutions for construction, public organizations, financial institutions, healthcare, real estate, and wholesale. Through its countrywide contractor referral network, Liberty Mutual also promotes 24-hour claims assistance.
#7. Progressive Commercial
We chose Progressive as our best insurer for commercial auto insurance because it is the largest specialist in this space and knows how to handle business auto claims better than anyone.
Progressive is the largest commercial auto insurance in the United States, having been in 1937.
While commercial vehicle insurance is one of Progressive’s primary focus areas. The company also provides general liability, workers’ compensation, BOPs, professional liability, and cyber insurance companies. Progressive offers insurance for 61 different businesses and occupations. Including gyms, yoga instructors, auto mechanics, painters, and beauty salons, among others.
When your firm has general liability coverage or a business owner’s policy in place, Progressive offers a discount on commercial auto coverage even if the general liability or business owner’s insurance is with a different carrier. Business owners can save up to 15% by prepaying their annual rates in full.
What is the Benefit of a Professional Insurance Market?
Protect Your Operation from Financial Losses Caused by Lawsuits If you have professional indemnity insurance, the insurer will pay for all of your legal defense costs in the event that you are sued. This will prevent any interruptions to your business. Errors and omissions insurance will pay for defense costs such as attorney fees, the expense of going to court, and the cost of filing legal documents, among other things.
Is Professional Liability Expensive?
For professional liability insurance, the annual premiums for many different types of small enterprises typically range from 350 dollars to 1,800 dollars. That comes up to a monthly cost of between $29 and $150. A significant number of our policyholders pay somewhere in the neighborhood $400 annually for professional liability coverage.
Who Needs Professional Liability Insurance?
If your company delivers services to its customers, getting professional liability insurance is a smart move that should not be overlooked. Purchasing a policy is mandatory if the conditions of your contract with your customers stipulate that you must maintain this level of coverage at all times. It is possible for businesses of any size operating in any sector to benefit from purchasing professional liability insurance. Even the tiniest organizations run the risk of becoming embroiled in professional liability litigation, which can have a minimum settlement requirement of several thousand dollars.
What Is the Difference Between General Liability Insurance and Professional Liability Insurance?
Two of the most prevalent types of insurance policies purchased by commercial enterprises are general liability insurance and professional liability insurance. Claims that involve bodily injury and property damage are covered by general liability insurance, as are lawsuits that involve advertising injuries such as slander, as well as medical bills. The only kind of claims that are covered by professional liability insurance are those linked to business errors and carelessness.
How does professional liability insurance protect different professionals?
#1. Accountants and auditors
Accountants’ and auditors’ professional liability insurance companies cover the costs of lawsuits resulting from accounting errors. Data entry problems, miscalculations, or lost documentation. Because the policy provides the client with indirect financial protection. Some clients will demand confirmation of insurance before agreeing to deal with your firm.
#2. Architects
Architects are covered by professional liability insurance companies in the event that a building design fails to fulfill project standards, is late, or contains errors. A clause requiring professional liability insurance coverage could be in a client contract.
#3. Consultants
Professional liability insurance for consultants offers financial compensation for lawsuits alleging ineffective advice or inaccurate projections. Some clients may ask you to provide proof of professional liability insurance before they agree to work with you.
#4. Engineers
Engineers’ professional liability insurance protects them financially from litigation arising from issues like cost overruns, delivery delays, and difficulties with construction supplies. for some projects. You may be required to show proof of professional liability insurance to a client, partner, or licensing board.
Is it Good to Have Professional Liability Insurance?
Consider purchasing professional liability insurance if your company is in the business of selling its skills. This coverage, which protects your firm and your bottom line from client claims of late, unfinished, or poor work, is also known as errors and omissions insurance, or E&O insurance. Allegations like these can result in expensive lawsuits being filed.
What is Covered by Professional Liability Insurance?
If you make a mistake in the professional services that you provide to a customer or client, having professional liability insurance can assist cover you and your organization financially. This type of insurance protection is often known as mistakes and omissions insurance (E&O). It does not matter how knowledgeable you are in your field; occasionally you will make a mistake.
Is Professional Liability the Same as Workers Comp?
Claims made by your employees for injuries experienced while on the job are not covered by your general liability insurance or your professional liability insurance. Workers who sustain injuries on the job or get ill as a result of a work-related accident or disease are eligible for benefits under their employer’s workers’ compensation insurance policy.
What is Harder to Prove Professional Liability or Professional Negligence?
To successfully defend or prosecute a claim of professional responsibility, it is essential to have a solid understanding of how the insurance coverage for such a claim differs from that of a general negligence claim. Claims related to professional liability are, in a nutshell, typically more difficult to prove.
FAQ
What is included in professional liability insurance?
Professional liability insurance covers claims of actual or alleged negligence that arise from providing professional services, like giving incorrect advice, an omission, or failing to deliver a service. This coverage includes damages and defense costs up to your policy limits, regardless of whether a mistake was made.
What is the difference between general and professional liability insurance?
The main difference between general liability and professional liability is in the types of risks they each cover. General liability covers physical risks, such as bodily injuries and property damage. Professional liability covers more abstract risks, such as errors and omissions in the services your business provides.
Is E&O the same as professional liability?
What Is Errors & Omissions Insurance? Errors and omissions insurance is another name for professional liability insurance. So, you’ll still get the same coverage, despite the different names.
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