What is Professional Liability Insurance?
Professional liability insurance, also known as errors and omissions (E&O) insurance, protects against liability incurred while performing a professional service. Most professional liability policies only cover financial losses suffered by third-parties. They will not cover bodily injury or property damage, these claims are usually covered by a general liability policy. Accountants, attorneys, real estate brokers, consultants, physicians, architects and engineers are some of the professions that need professional liability coverage.
Errors and omissions coverage is mostly written with claims-made coverage triggers, meaning coverage only applies to claims generated and submitted within the policy term. Also typical of this coverage is a “shrinking limits” provision. Unlike commercial general liability policies where defense costs are paid in addition to policy limits, E&O coverage subtracts defense costs from the policy limits. Umbrella insurance is often a great addition to professional liability as it raises limits, giving policyholders more coverage.