You are good at your job. You are an expert in your field. But you can still make mistakes. And when you do, you may face legal and financial liability. In some cases, that liability could put your career and financial stability at risk.
That’s where professional liability insurance comes in. There are dozens of types of professional liability insurance, as well as individualized rules for each career and industry. All the separate recommendations and rules can make this a confusing area of commercial insurance.
So who needs professional liability insurance? Read on to learn more about this coverage. If you have additional questions, contact the Wallace & Turner team here.
Professional Liability Insurance Defined
Having a thorough understanding of professional liability insurance will help you determine whether you need it, and how much coverage is appropriate.
Here’s the short and sweet definition: Professional liability insurance is an insurance policy that protects you if a client or customer decides to sue you for a financial loss. These insurance policies protect you by covering the financial liability you may face if a client sues you because of alleged negligence that caused them harm. These kinds of lawsuits may look different across a wide range of industries, but the basics are usually the same.
Professional liability insurance is often referred to as errors and omissions (E&O) insurance. Depending on your job title and industry, these policies may protect you in the event of the following issues that could lead to financial harm for your clients:
Breaches of contract
Errors in the work you deliver
Undelivered products or services
Missing deadlines
Projects going over budget
General negligence resulting in demonstrable financial harm
Who Should Have Professional Liability Insurance?
Mistakes and negligence are possible in almost every industry and job title, but not every industry requires professionals to obtain professional liability insurance. While some states can be quite strict about requiring doctors, lawyers and similar professionals to have E&O insurance, Ohio is much less strict.
For example, not all doctors are required to carry medical malpractice insurance in Ohio. However, most hospital systems and individual institutions require physicians to obtain this coverage.
The Ohio State Bar Association says attorneys in Ohio are not required to have legal malpractice insurance, but if they don’t, they must notify their clients and have them sign a form acknowledging that they do not have the coverage.
However, Ohio state law does provide for several specific instances in which professionals must maintain E&O insurance, and it can be tough to keep up with which industries require professional liability coverage by law. For instance, Eastern medical practitioners and acupuncturists must have at least $500,000 in professional liability insurance in Ohio.
Because the specifics of who is required by law to have professional liability coverage in Ohio can be a little confusing, it’s always a good idea to reach out to a local, independent insurance agent to discuss the basics of the coverage you need.
Who Else Needs E&O Coverage?
It’s important to remember that you may still need professional liability coverage even if you aren’t specifically required by law to carry it. Really, any professional or business owner who stands to be sued for a significant amount of money by a client or customer should consider this coverage.
Here are some examples of professionals who often need to purchase professional liability insurance:
Real estate agents
Accountants
Architects
Engineers
Insurance professionals
Financial advisors
Information technology professionals
Management, security and other types of consultants
This is by no means an exhaustive list of industries that might benefit from professional liability coverage. If you are concerned about being sued by a client or customer due to a financial loss, you may be a good candidate for E&O coverage.
Professional Liability Insurance vs. General Liability Coverage
Many business owners already purchase general liability insurance. And when they start hearing about professional liability insurance, they think they are already covered. That assumption is often a mistake.
That’s because general liability and professional liability are two distinct types of liability. General liability insurance covers you in the event of an injury to someone else’s physical body, property or reputation due to your negligent actions. Professional liability insurance covers you in the event of a client’s financial loss due to your actions in a professional capacity.
Let’s illustrate that with a real-world example. If you are an accountant, your general liability insurance would cover you if someone came to your office and was hurt after slipping on a wet floor. Your professional liability insurance would cover you in the event that you made a mistake with a client’s account that resulted in the loss of money for the client.
In both cases, how much you are covered for will depend on the specifics of your chosen insurance policy, but both types of coverage are essential to ensuring the future of your business. No matter how confident you are in your professional abilities, mistakes can and will happen. When they do, you need to be covered.
Wallace & Turner: There for You and Your Business, Always
The truth is that, in most fields, it’s not a question of if you will make a mistake in your career — it’s when. We’re all human, and humans make mistakes. Professional liability insurance can make sure that a simple mistake doesn’t turn your life upside-down.
Whether you need professional liability insurance will depend on your exact career, Ohio law and your level of risk tolerance. In other words, the answer to the question of who needs professional liability insurance is not always clear.
What is always clear is the advice you will get from the team of independent insurance agents at Wallace & Turner. We have been serving the Urbana and Springfield, Ohio, communities for decades. If you have questions about professional liability insurance or any other business insurance policy, reach out to us via email at info@wtins.com or phone at 937-324-8492.
