Professionals that operate their own businesses need professional liability insurance in addition to an in-home business or Business Owner's policy. This protects them against financial losses from lawsuits filed against them by their clients.
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.
Professional liability insurance is a specialty coverage. Professional liability coverage is not provided under homeowners endorsements, in-home business policies or Business Owner's policies (BOPs).
Professional liability insurance coverage gives your business protection from the risks you face in delivering your professional services.
You should consider professional liability insurance coverage if your business:
Professionals that should consider professional liability are:
Professional liability insurance protects small businesses by covering the costs of client lawsuits claiming substandard work. A client may claim your negligence caused them financial harm. And a client that thinks you cost them money may take legal action in hopes of recovering their losses.
Professional liability can cover the costs of lawsuits over:
Successfully defending yourself in court can be expensive. Professional liability insurance will cover those costs and help ensure your business stays afloat.
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An optometrist prescribes eyeglass lenses with an incorrect astigmatism correction. While wearing the glasses, the customer falls down stairs and suffers an injury because his vision is distorted by the incorrect prescription.
A claim is made for the customer’s medical expenses to treat the injuries, including pain and suffering, for an amount of $20,000.
An advertising agency developed a campaign for a major client that involved the production of a series of television commercials. The agency subcontracted the commercial’s background music to a local freelance musician. After the commercial aired, another musician claimed the music used in the commercial had been copied without her permission from a work she had previously recorded.
The agency and its client were sued in a $100,000 copyright infringement claim
A groomer nicks a tendon in a dog’s leg while grooming the dog with a shaver. A claim is made for the veterinary care expenses associated with the dog’s injury.
The cost to cover the injury was $3,800
A placement agency was hired to locate a qualified candidate to run a client’s human resources department. The agency recommended a candidate with management experience but failed to recommend a candidate with a human resources background. After the client hired the recommended candidate, it later terminated the person for lacking proper qualifications. The client hired an attorney to collect damages incurred as a result of the negligent placement. In addition, the client had to retain an outside human resources provider to perform these functions while a replacement was found.
It cost over $175,000, including defense and settlement costs .
A travel agent booked a trip around the world for an elderly couple celebrating their 50th wedding anniversary. The husband, who purchased the trip, mentioned that his wife needed handicapped access for the entire trip, which included hotel stays. He called to check on the planning of the trip multiple times and reconfirmed the handicapped access. When the couple arrived in London, they discovered that their hotel had no handicapped access because of the age of the building. The husband was furious and called the agency to demand a refund. The agency rebooked the London leg of the trip and reconfirmed all of the couple’s other accommodations. This cost the couple an additional $10,000 as the trip was being changed at the last minute. They demanded reimbursement for this charge. The additional expenses exceeded $15,000.
The Travelers Indemnity Company and its property casualty affiliates. One Tower Square, Hartford, CT 06183 Professional liability insurance is a smart and practical way you can take action to protect the business you’ve worked hard to build. Learn more about how Travelers Professional Insurance coverage can help protect your business.
This material does not amend, or otherwise affect, the provisions or coverages of any insurance policy or bond issued by Travelers. It is not a representation that coverage does or does not exist for any particular claim or loss under any such policy or bond. Coverage depends on the facts and circumstances involved in the claim or loss, all applicable policy or bond provisions, and any applicable law. Availability of coverage referenced in this document can depend on underwriting qualifications and state regulations. © 2021 The Travelers Indemnity Company. All rights reserved. Travelers and the Travelers Umbrella logo are registered trademarks of The Travelers Indemnity Company in the U.S. and other countries. BSLSS.0099-D Rev. 3-21