Professional Liability insurance, also known as Errors & Omissions (E&O) coverage, protects you if you’re sued for the work or advice provided by your business. It’s designed to protect you for allegations involving breach of duty, negligence, misstatement, omissions, and wrongful acts.
Who needs this coverage?
For anyone who presents him or herself as an expert in their field (or if legally considered an expert), professional liability coverage should be an integral component part of one’s business insurance plan, just as general liability, property, or worker’s compensation coverage. Professionals in the fields of accounting, medical, legal, architecture, engineering, IT, real estate, and service businesses should seriously examine their need for E&O insurance.
Why do you need this coverage?
A litigious society and high jury awards necessitate having Professional Liability insurance to protect you and your business if you’re sued and found liable. Moreover, depending on your trade, state or local government agencies may require you to carry professional liability coverage (for example, most states require medical doctors to have malpractice coverage). Similarly, government agencies or private companies may require you to have this coverage before they award key contracts. In addition, even if a suit is without merit, the cost of defending it can be significant. If your business doesn’t have the deep pockets to handle these potentially large expenses, Professional Liability coverage can serve as a cost-effective resource.
What should you be looking for in E&O policy?
As we mention there are two significant expenses in any liability claim: the cost of defending yourself and indemnification if you’re found liable. Therefore, depending on your business and the industry you’re in, you should consider the size of your claim limit. As insurance advisors that specialize in professional liability insurance, we can share with you information about claims experience in your industry and review your specific operation to help determine what limits you should be carrying.
In addition, when examining claim limits, be sure you address how defense costs are handled. Some policies subtract defense costs from your overall claim limit, which lowers the amount remaining to pay claims. Other polices pay for defense costs in addition to a claims limit, which leaves all of your coverage available to pay claims.
Moreover, examine specific provisions relating to your legal defense. Some policies include a “duty to defend” clause, which means that the insurance company will pay to handle your case in all situations. Other policies have an “option to defend” clause, which means that the insurer will decide whether to provide a legal defense for you. Policies also vary in how your defense may be handled. Some policies may let you choose your attorneys; others leave it to the insurer.
These are just a few of the considerations to review when determining what type of E&O insurance policy to purchase. Axis Insurance Services can help you in making that decision. We provide tailored Professional Liability insurance programs for a wide range of industries and work with various insurance companies to secure the best policy that fits individual insureds. Contact us at (877) 787-5258.
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