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Professional liability insurance protects against claims arising from your acts, errors or omissions in rendering services of a professional nature. Businesses involved in everything from advertising to engineering need to seriously consider this coverage. In fact, users of services such as those provided by lawyers and accountants often require that the insurance be in place before contracting with the professional. The policy premium is usually based on the following factors: the profession involved, the number of professionals covered, annual revenues, location of the business, the limit of liability and the deductible.

Do I need professional liability insurance?
Professionals are expected to have extensive technical knowledge or training in their particular area of expertise. They are also expected to perform the services for which they were hired, according to the standards of conduct in their profession. If they fail to use the degree of skill expected of them, they can be held responsible in a court of law for any harm they cause to another person or business. When liability is limited to acts of negligence, professional liability insurance may be called “errors and omissions” liability.

What does Professional Liability Insurance Cover?
It covers the liability of rendering or failing to render professional services, but does not cover fraudulent, dishonest, or criminal acts. Professional recommendations expose the professional to lawsuits for errors or omissions to clients or insureds.

Below is a partial listing of the kinds of professional occupations that have a certain level of qualification to practice their trade, and therefore, would find it beneficial to carry Professional Liability Insurance:

The "insured" in many of these policies includes the covered organization itself and its past or present partners, directors, officers, and employees while acting within the scope of their duties.

What is a professional?
The definition of a "professional" has expanded over the years to include those occupations in which special knowledge, skills and close client relationships are paramount. More and more occupations are considered professional occupations, as the trend in American business continues to grow from a manufacturing-based economy to a service-oriented economy. Coupled with the litigious nature of our society, the companies and staff in the service economy are subject to greater exposure to malpractice claims than ever before

Why do these kinds of jobs require this higher level of liability insurance?
Professionals are expected to have extensive technical knowledge or training in their particular area of expertise. They are also expected to perform the services for which they were hired, according to the standards of conduct in their profession. If they fail to use the degree of skill expected of them, they can be held responsible in a court of law for any harm they cause to another person or business. These professionals’ customers have the right to expect they will act within certain parameters of competence. When someone's actual performance falls below these levels, their customers and clients may seek damages against the person or the business.

Types of Lawsuits
Of the suits that can be brought against professionals, the two most common are breach of contract and negligence in the performance of services. Negligence suits, which are more frequently made, arise from damages sustained due to a professional's failure to perform according to known standards of conduct in his or her field.

Financial consequences of such suits, including the costs to defend them, may be severe. It is critical that professionals recognize their exposures to financial losses, and adopt a risk policy to deal with these exposures.