Does your business counsel or provide advice to other businesses? If so, you’ll likely want to purchase professional liability insurance commonly known as errors and omissions insurance.
Professional liability insurance is a type of liability coverage designed to protect professionals including but not limited to: accountants, attorneys, real estate brokers and consultants, against liability incurred as a result of errors and omissions in performing their professional services.
Some examples of what is covered under an E&O policy are:
- Documentation errors
- Verification mistakes
- Failing to protect clients’ property or data and/or misusing it
- Misrepresenting products or services
- Violating legal or state laws
- Breach of contracts, poor ethics, mistreating any aspect of the client or their business
- Exposing proprietary or confident company information
Professional liability insurance will pay the cost of legal defense against claims and payment of judgments against you, up to the limit of the policy. In general, coverage does not extend to non-financial losses or losses caused by intentional or dishonest acts. Other fees, such as licensing board penalties, may also be included. Policies will generally have a deductible ranging from $1,000 to $25,000. The amount of professional liability insurance you will need and how much it will cost depends upon the size of your business and the level of risk it poses.
You may be able to include professional liability coverage in a Commercial Package Policy (CPP) as an endorsement. Note, however, the professional liability coverage is not included in an in-home business policy or Business Owners Policy (BOP).