What Are Professional Liability Policies?

Some risks overreach the boundaries of the General Liability policy. These risks require the use of a specially designed policy, called the Professional Liability policy. Who all needs a Professional Liability policy? Why aren’t these risks covered by the General Liability policy?

When you think of Professional Liability, you think of your doctor, your lawyer, and your accountant. These individuals are recognized professionals, and most certainly require a Professional Liability policy to be properly protected. These individuals need the Professional Liability due to the great financial and/or physical harm they can inflict on their clients if they do not properly perform their work. These professionals are also being held to a higher standard by the certifications and associations they belong to as a doctor, lawyer, accountant, etc., thus they are referred to as a ‘professional’. Being a professional, they assume more risk than what is covered in a General Liability policy, thus the need for the Professional Liability policy.

However, while doctors, lawyers, and accountants are all great examples, they only make-up a portion of all Professional Liability policyholders. The ones you don’t think about are personal trainers, insurance agents, architects, graphic designers, and many more (these examples are often referred to as quasi-professionals). A good rule-of-thumb on determining if someone has the need for a Professional Liability policy is if they have to have a state license to legally work. If a state license is required, they almost certainly will need a Professional Liability Policy. The follow-up rule is that they have any sort of certification needed for their job, they probably need a Professional Liability as well (an exception to this would be a First-Aid certification). While there are plenty of exceptions to these two rules, it will catch most people who need it (Note that some professions require a Bond instead of the Professional Liability policy).

If someone does need Professional Liability, it depends on their situation as to where they can get it. Some individuals must find personal Professional Liability policies on their own, such as the typical CPA. Others may have coverage provided for them from company, which would be the case for most nurses. A Professional Liability policy can be written to cover either situation, but in both situations, the policy will act in a similar way: providing a separate liability limit for claims caused by the errors or omissions of a professional or quasi-professional. 

Note from the Author (Nov. 14, 2014): After two years of work, we've entirely redesigned our website! Using SquareSpace, we were able to import this blog and we are continuing our blog there. To find the current version of this article and our new articles, click HERE.