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Professional Liability

Professional liability insurance (PLI), also called professional indemnity insurance (PII) but more commonly known as errors & omissions (E&O) in the US, is a form of liability insurance that helps protect professional advice- and service-providing individuals and companies from bearing the full cost of defending against a negligence claim made by a client, and damages awarded in such a civil lawsuit. Professional liability insurance may take on different forms and names depending on the profession. For example, in reference to medical professions it is called malpractice insurance, while errors and omissions (E&O) insurance is used by insurance agents, consultants, brokers and lawyers. Professions that commonly purchase professional liability insurance include accounting, engineering and financial services, construction and maintenance, general contractors, plumbers, etc. (many of whom are also surety bonded). Some charities and other nonprofits/NGOs are also professional-liability insured.

The primary reason for professional liability coverage is that a typical general liability insurance policy will only respond to a bodily injury, property damage, personal injury or advertising injury claim. Other forms of insurance cover employers, public and product liability. But various professional services and products can give rise to legal claims without causing any of the specific types of harm covered by such policies. Common claims that professional liability insurance covers are negligence, misrepresentation, violation of good faith and fair dealing, and inaccurate advice.

You should seriously consider professional liability insurance coverage if your business:

  • provides a professional service.
  • regularly gives advice to clients.
  • is requested by a client to have professional liability insurance to complete a contract.

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