Professional liability vs. errors and omissions insurance
Insurance lingo isn't always easy to understand, especially when a policy goes by multiple names.
Professional liability vs. E&O vs. malpractice insurance
Many industries use the terms “E&O insurance” and “professional liability insurance” interchangeably. You may also hear these policies called “malpractice insurance.”
Common industry names for this policy include:
- Professional liability insurance for architects, accountants, and consultants
- E&O insurance in the real estate and IT sectors
- Malpractice insurance in the medical and legal professions
No matter the name, this coverage protects you from lawsuits if you make a work mistake, fail to complete a project, miss a deadline, or are accused of professional negligence.
How professional liability insurance protects your business
Businesses that provide professional services typically need professional liability / E&O coverage because those services come with risks. A client could hold your business liable for:
- breach of contract
- work oversights or errors
- providing substandard or incomplete work
- missed deadlines
If these professional mistakes result in financial losses for a client, they could sue to recoup expenses. Professional liability / E&O insurance helps cover:
- attorney fees
- court costs
- settlements or judgments
Even if there was nothing wrong with the quality of your work, a difficult or dissatisfied client could sue your business over a perceived problem. In that case, you might win the lawsuit but still have to pay attorney fees and court costs out of pocket. Without professional liability / E&O insurance, a lawsuit could present a major financial difficulty for your business.
The benefits and cost of professional liability insurance
Professional liability insurance helps you market your business as trustworthy and responsible, setting you apart from uninsured competitors. It’s not just good for business – it’s often a must for business.
Many clients will require your company to carry this policy before they hire you. If a project doesn't go as planned, they feel assured they can recoup their losses. Review your contract carefully to see if this coverage is a requirement.
Insureon’s professional liability insurance cost report offers details on how much businesses in different industries can expect to pay for this coverage. Building designers pay the highest professional liability premiums, averaging $1,705 per year, while finance and accounting professionals pay just $400.
Compare professional liability insurance quotes from trusted providers with Insureon
Our easy online application lets you compare quotes for professional liability insurance from top-rated U.S. insurers. Once you find the right policy, you can begin coverage in less than 24 hours.