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 are not the only ones in need of Professional Liability policies. Some people who need Professional Liability policies 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: Some professionals require a Bond instead of the Professional Liability policy.

To get more specific, a Professional Liability policy is to cover the errors and omissions of a professional or quasi-professional who negligently caused harm in the scope of their profession. This wording is to signify the scope of the coverage. For example, someone tripping on your business premise wouldn't be covered by a Professional Liability policy, however, an insurance agent improperly explaining the scope of an insurance coverage would be.