Professional Liability, also referred to as Errors and Omissions (E&O) insurance, is designed to protect those who give professional services or advice against losses that could result from a claim of negligence, errors, or omissions in the performance of your professional services. For example, let’s say that a contractor installs flooring ineffectively, and it leads to a trip and fall accident. Professional Liability Insurance would financially protect that contractor should they be faced with a lawsuit due to that accident.

Other cases where professional liability can protect you is in cases involving loss of client data, system of software failure, claims of nonperformance, claims of fraud, or overall negligence. The most important thing to remember about professional liability is that even if a legal claim has no merit, the defense costs alone are enough to do significant financial damage to your company, especially if it is a small business.

A common mistake that business owners or professionals make about their insurance coverage is that general liability is enough to protect them against any type of claim. Unfortunately, this is not the case. Typically, a general liability policy will only cover claims of bodily injury, property damage, personal injury, or advertising injury. General liability will not provide protection if you are faced with a claim of misrepresentation, violation of good faith or fair dealing, or giving inaccurate advice.

A benefit of professional liability insurance is that coverage will typically continue for as long as the policyholder provides covered serves or products, plus the span of any applicable statute of limitations. It’s imperative though that you do not cancel the policy if still providing professional services or advice, since a break in coverage could result in what’s called a “gap in coverage”, which is the loss of all prior acts.
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