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Professional Liability Archives - Pioneer Business Insurance

22 Aug


What is the Difference Between General Liability and Professional Liability?

August 22, 2016 | By |

Most of my clients are familiar with general liability and the need to protect their companies against general liability losses. Yet, professional liability is often just as important, but much less understood. In this article, I’ll give a brief description of general and professional liability and point out some of the key differences between them.

General liability is intended to cover damages to a third party resulting from bodily injury or property damage. General liability policies include coverage for premises liability, and often include coverage for products liability. Some examples of common general liability claims include slips, trips and falls at a business premises. Other examples include property damage or bodily injury caused at a customer’s home or place of business, or damages caused by a product that is manufactured or distributed by a business.

Professional liability, sometimes used interchangeably with errors & omissions (E&O), covers professional mistakes that result in economic loss to a third party. For example, if a professional is hired to make recommendations to improve a process and the recommendations result in financial loss rather than gain to their customer, the customer may claim economic damages.

There are several differences between general liability and professional liability. Here are  3 key differences:

1. Coverage Triggers-The coverage triggers that obligate an insurer to respond to a general liability claim are bodily injury or property damage. Simply put, there must be bodily injury or property damage in order for general liability coverage to apply.

In comparison, the trigger for professional liability is the notice to the insured of economic damage claimed by a third party.

2. Coverage Period-General liability policies are usually written on an “occurrence” basis, which means that the policy responds when a third party suffers bodily injury or property damage, regardless of when the claim is filed for damages. In other words, a claim could be filed for a policy that was in effect several years prior if the incident that resulted in damage occurred during the prior policy period.

In contrast, professional liability policies are often written on a “claims-made” basis, which requires that a claim be made during the policy term or within a specified period following the policy term. In other words, the incident must occur during the policy period and the claim must be reported within the policy period. Thus, if a claim is brought after the policy term in which the incident occurred, and there are no changes to the current policy to cover prior acts, there would likely be no coverage in place.

3. Retention-General liability policies often do not require a deductible or out-of-pocket expense in the event of a claim. Although, some general liability policies do include a small deductible.

In contrast, professional liability policies generally include a “retention,” commonly ranging between $1,000 and $10,000. The retention must be paid by the insured before the policy responds.

In summary, general liability coverage protects a business from claims resulting from bodily injury or property damage suffered by a third party. Professional liability protects a business from economic damage claims resulting from professional mistakes.

The examples above are some of the key differences between general liability and professional liability. However, it is important to discuss the unique insurance needs of your business and the specifics of your business coverage with a licensed insurance professional. At Pioneer Business Insurance Agency, we work hard at being accessible, helpful, and result-oriented. Learn more about us at How can we put our expertise to work for you?

24 Jul


What is Professional Liability, and who needs it?

July 24, 2012 | By |

Professional liability insurance, also referred to as errors & omissions (E&O) insurance provides coverage for financial loss that arises out of the advice or services performed by a professional or a business. E&O claims are often the result of a client who alleges that a professional failed to provide a service that was agreed on, or provided a service that did not have the intended or promised results.

Some examples of professionals that have traditionally sought E&O protection include doctors, accountants, real estate agents, securities brokers, bookkeepers, appraisers, actuaries, title agents, and a variety of consultants. Yet, today there are many other services for which there is an E&O exposure. Advertising agencies, printers, web hosts, financial planners, personnel agencies, publishers, engineers, internet service providers, and market research companies are just a few businesses with an exposure to professional liability. Basically, anyone who provides a professional service or advice is at risk of a loss resulting from errors, negligent acts, or omissions.

Consider these examples of professional liability claims. A software provider was hired to integrate the accounting and records systems for an organization.The organization notified the provider of problems with the system and claimed that the training provided was inadequate. The provider attempted to resolve the issues, but was unsuccessful. The organization demanded that the provider pay $120,000 including the costs of the software, legal fees, research of replacement software, and installation of new software.

In another example, a real estate agent marketed herself as having expertise in residential and commercial real estate. She assisted a client in finding a home where he could also run a pest control business. However, the real estate agent was unfamiliar with the local zoning issues in the particular area where the home was located. The real estate agent encouraged the purchase of the home and the sale was made. Several months after the home was purchased, the homeowner received a notice from the city informing him that the pest control business did not meet zoning regulations. After attempting to have the property re-zoned, the homeowner brought a suit against the real estate agent and her broker for compensatory damages, lost revenue, and attorney’s fees.

Not only does a professional liability policy provide coverage for actual damages that a professional is found liable for, most policies also cover defense costs. Attorneys fees, court costs, filing fees, and costs associated with investigation could be devastating to a small business. Even if the claim is frivolous, a professional liability policy can provide coverage for the cost of defense.

If you provide a service to clients for a fee, talk to a licensed insurance professional about your exposure to a professional liability loss. Even with the best procedures in place, mistakes can be made, and mistakes are often quite costly when it comes to errors and omissions claims.


At the Pioneer Business Insurance Agency, we work hard at being accessible, helpful, and result-orientated. Learn more about us at How can we put our expertise to work for you?