Professional Liability Insurance – What Does It Cover?
Errors & Ommissions and MORE
“Professional Liability Insurance? I already have General Liability Insurance!” While it’s important for your business to have general liability coverage for property damage and bodily injury, SGB Insurance Services, Inc. recommends adding Professional Liability Insurance to your business portfolio, especially if your company offers contractual agreements because it insures the people and/or entities of your business from negligent claims made by third parties or even internal sources.
From failure to render a service to malpractice suits, Professional Liability can provide a wide variety of options, such as:
- Errors and Omissions Liability (E & O) – E & O covers any mistakes made by employees who work on behalf of your business if your business charges fees for your services. It can include coverage for any errors such as failure to perform or violations of the contract. Depending on your industry, your insurance needs will vary.
- Directors and Officers Liability (D & O) – Having financial protection for your business’s Directors and Officers can prevent loss in the event that they are held liable from actions related to their corporate positions. This can include anything from conflicts of interest to mismanagement of company assets and violation of laws.
- Fiduciary Liability – Fiduciary covers claims that involve the violation of the Employee Retirement Income Security Act, or ERISA. If a manager, for example, violates the financial obligations of ERISA, having the right coverage can protect your company if held liable in situations from imprudent investments to failure to enroll employees.
- Employment Practices Liability – With proper insurance, your business can be protected if a worker claims that his or her rights have been violated. This can include violations from sexual harassment and discrimination to violations of the Americans with Disabilities Act (ADA), mismanagement of employee benefit plans, and wrongful termination.
Do You Really Want to Risk It?
Having General Liability without Professional Liability (Errors & Omissions) coverage you are taking a serious risk. Commercial General Liability does not provide coverage for service errors, infringement of copyright, trademark, title, trade name, slogan; allegations of libel, slander, breach of privacy or negligence regarding the content of any media communication or any other Professional Liability issues. Errors & Omissions (E&O) provides coverage for all these issues and more.
E&O insurance provides coverage to help protect your assets when GL insurance does not. It picks up where the GL policy stops, which can literally save your business when you consider that your GL policy doesn’t cover the consequential financial loss.
Even if you’re not at fault, litigation is time-consuming and costly. Errors & Omissions insurance will not only pay for damages but also the cost of defense. E&O insurance is the most cost-effective way to protect your business.
For example, for Web Designers, Errors and Omissions Liability protects from claims if your client holds you responsible for programming errors, web application performance, or the failure of your work to perform as promised in your contract.
Coverage also extends to both W2 employees and 1099 subcontractors and can be worldwide in scope.
There are a number of other reasons you need E&O protection:
- While well-written contracts can help protect you against lawsuits, even clear and concise contracts are subject to legal attack.
- An E&O lawsuit must be defended against, even if it is unfounded and groundless.
- If you do not have E&O insurance, Directors and Officers may be liable for failure to obtain proper insurance.