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Professional Liability Insurance
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Business Insurance Quote RequestWhat is Professional Liability?
Professional Liability is triggered by a professional giving the wrong advice, failing to give the right advice or other failure in providing professional services. It is the primary lawsuit risk for any licensed professional or any consultant providing professional advice.
Who is a Professional? - A professional is someone whose occupation requires special skill and training. This special skill is often recognized by state requirements for education, testing and licensing or specific industry accreditation. Examples of a "professional" are medical doctors, accountants and engineers.
What is a Professional Errors & Omissions Contract?
It is an insurance contract that provides protection from liability claims for economic damage arising from negligence committed by a professional breaching their professional duty. A Professional Liability contract is normally "Claims Made" policy form and written for a specific area of professional service. Be sure that the definition of professional service included in the Professional Liability policy covers the full range of your intended work.
Claims Made Form
A "Claims Made" Liability form will respond to a claim event that occurs during the time the policy is in force or its retroactive date and also reported during the allowed reporting period. A normal reporting period is the policy term plus sixty days. A "Claims Made" Liability policy can lead to an additional vendor requirement of "Tail Coverage" (extended reporting period for claims) which can be a large, additional expense.
Important Terms for a Claims Made Policy
Retroactive Date - When you buy a renewal of your Professional Liability Insurance contract, you want to include your prior policy period in your new plan. This so-called "Retroactive Date" is the start of your continuous coverage. If a Professional Liability claim erupts that happened in this prior contract period (i.e., after the "Retroactive Date") but is reported during the current policy term, the current Product Liability policy will respond to it. Insurance companies will rate for this added retroactive exposure.Standard Reporting Period - The time during which the insurance company will respond to a reported claim. This is normally the policy term plus sixty days beyond the expiration of the policy.
Tail Coverage (Extended Reporting Period) - This is an extended reporting time period that can be purchased when a policy is not renewed in which a claim during the policy term can be reported and the insurance respond. Tail Coverage is typically sold in year increments and is often quite expensive.
Your business is ready to launch, so what insurance do you buy?
An overview of the typical insurance issues for professionals hired as consultants.