Understanding What Professional Liability Insurance Doesn’t Cover

Over the years, insurance agencies have created a number of different types of insurance policies for businesses. While this can be beneficial for companies looking to protect their operations on a number of levels, this is a great opportunity for confusion to settle in.

Some policies cover a broad array of scenarios while other include specific types of coverage and exclude others. When it comes to needing to use insurance, but not sure what exactly is covered, can create big problems for businesses. Finding out the insurance you purchased doesn’t cover the claim brought against you can result in even bigger headaches. One kind of insurance coverage that gets confused in terms of what it covers is professional liability insurance. Let’s see what it covers and what it doesn’t.

Professional Liability Insurance

Professional liability insurance is more commonly known as errors and omissions (E&O insurance) and is a special kind of coverage that protects businesses against claims. These claims can be related to the services provided by the business, but somehow ended up harming clients, be it financially, emotionally or physically.

Professional liability insurance can cover the cost of defending a company in a civil lawsuit and certain damages awarded. This kind of coverage is required by law in some areas for specific practices, including medical and legal services.

What’s Not Covered by Professional Liability Insurance

While professional liability insurance is very beneficial to have, it is not a blanket program, much like general liability insurance is. Businesses should be aware of some of the exclusions that are related to professional liability insurance to make sure they invest in additional insurance as needed.

  • Intentional Wrongdoing: Knowingly causing damage to a customer is not covered by professional liability insurance. Businesses want to maintain the highest standards in their services, but this can be sidelined by certain wrongdoing actions. If there’s proof that a business knowingly set out to cause harm in some way, professional liability insurance will not cover it.
  • False Advertising: Professional liability insurance doesn’t cover for false advertising. False advertising can cause businesses to shell out huge amounts of money if they are caught in a lie or don’t include fine print in their advertising. Once customers pick up on the fact that your company is falsely claiming to offer certain services or that you don’t have the right experience as you claim (i.e. in order to give your business notoriety) they can sue you.
  • General Liabilities: Regular accidents that aren’t related to your work aren’t covered by professional liability insurance. If you own a coffee shop, but someone trips over a chord, you’ll need general liability in place to cover this as it’s not related to what you offer.
  • Employee Injuries: Having professional liability insurance in place will not protect companies against employee injuries. No matter the injury, this is a job for workers’ compensation insurance to kick in for a business.
  • Property Damage: If someone causes damage to your workplace, such as breaking and entering or vandalizing the premises in some way, this is a job for property insurance, not professional liability insurance. This kind of policy can compensate a business for property that is lost or damaged because of theft, fire, or weather-related events.

About Walker & Associates

At Walker & Associates Insurance, we have been a leader in helping to protect businesses and families since 1960. Our coverages are written to cover your business inside out. For more information, we invite you contact us today at (800) 213-7126.