January 11, 2023
Professional Liability Insurance in San Francisco
Professional Liablity insurance is often closely tied to General Liability Insurance – but they are not the same. Businesses that have Commercial General Liability policies should always attempt to explore a Professional Liability policy alongside it. Occasionally – the difference between a given claim hitting one policy vs the other is hair’s width of difference.
Insurer and Industry Definitions of Professional Liability:
Hiscox Insurance states that Professional Liability Insurance is “Indemnity insurance, protects your business if you are sued for negligently performing your services…” further noting “even if you haven’t made a mistake.”
The Hartford says Professional Liability Insurance “helps cover you and your company if you make a mistake in the professional services given to a customer or client. “
State Farm says “Professional liability insurance, also known as errors and omissions insurance, helps protect your business if you are sued for negligence in the performance of services you provide to your customers.” The use of the similar term of errors and omissions insurance may or may not be a better term, but it is increasingly being replaced with the term Professional Liability.
State Farm [whom we have not affiliation with] outlines the coverages to include [potentially] the following areas: “Actual or alleged acts or errors” and “Libel and slander allegations arising out of your professional services” lastly “Cost of legal defense for covered liability claims.” One should note that not all policies are the same and these exact coverages may or may not be available on your form.
The International Risk Management Institute, an Insurer publisher and educator has a much more complex definition of Professional Liability Insurance: “a type of liability coverage designed to protect traditional professionals (e.g., accountants, attorneys) and quasi-professionals (e.g., real estate brokers, consultants) against liability incurred as a result of errors and omissions in performing their professional services.” Their definition also states that: ” Although there are a few exceptions (e.g., physicians, architects, and engineers), most professional liability policies only cover economic or financial losses suffered by third parties, as opposed to bodily injury (BI) and property damage (PD) claims.”
IRMI states that “The vast majority of professional liability policies are written with claims-made coverage triggers.” And this is a salient detail for professionals to learn and understand. Lastly IRMI states that “professional liability policies commonly contain what are known as “shrinking limits,” meaning that unlike CGL policies (where defense costs are paid in addition to policy limits), the insurer’s payment of defense costs reduces available policy limits.”
What is the Difference between Professional Liability and General Liability?
Professional liability is NOT general liability and vice versa. The two are distinct and different. Most businesses should carry BOTH. The Hartford states that “difference between general liability and professional liability is in the types of risks they each cover. General liability covers physical risks, such as bodily injuries and property damage.” And Professional Liability “covers more abstract risks, such as errors and omissions in the services your business provides.”
Progressive Commercial states that “The difference between general liability and professional liability is the types of risk they cover” They are same in some respects, “both [are] designed to: Protect against business liabilities… [and] Meet contractual requirements.”
Many of these publications may make it seem the the coverages are totally different. However I would caution businesses from assuming just that. Some claims that can occure can straddle the line between the two.
Professional Liabililty insurance is also not just Doctors, and Lawyers. Insurance Agents, Accountants, Real Estate Agents, Financial Brokers, Tech Entrepreneurs, Consultants,and so many other classes need Professional Liability insurance.
Contact Marindependent for an Estimate Today.
Sources of Information:
The Hartford Professional Liability Insurance.
