Professional Liability Insurance: What You Need to Know (by Industry!)

So you’ve probably heard of professional liability insurance (aka errors and omissions Insurance). In brief, professional liability insurance protects the professional services industry from negligence claims that result in the financial loss of a third party (typically your clients) arising from an act, error, or omission committed in the course of the policyholder’s performance of services for another failure, OR failure of your product to perform as intended or expected. Basically, it acts as malpractice insurance for your industry.

One crucial aspect to consider in professional liability insurance is risk retention. Risk retention involves the strategy of setting aside a certain level of risk exposure that the policyholder is willing to bear on their own, before the insurance coverage comes into play. This can often be in the form of a deductible or self-insured retention. By having a risk retention insurance policy component in your professional liability insurance policy, you can align your coverage with your risk tolerance and potentially lower premium costs.

Confused as to how professional liability insurance to applies to your business specifically? Don’t worry, here’s a handy guide to professional liability insurance for financial services, medicine, tech and more:

• Accountant’s Professional Liability Insurance
• Media Liability Insurance
• Medical Malpractice Insurance
• Technology Errors and Omissions Insurance
• Financial Fund Professional Liability Insurance

Accountant’s Professional Liability Insurance

• Who it’s for:
  • Bookkeepers, CPAs, Tax Preparer, Enrolled Agents, Accounting Professionals/Firms
• What it includes:
  • Coverage for Personal Injury, Crisis Event Management
  • Errors and omissions in services provided as
    • a trustee, receiver, executor, and notary public
    • a financial advisor/planner or investment advisor

• When it’s relevant:
  • Ex. An accountant made an error on a client’s financial statements, the client files a claim for the cost of having another firm fix the mistake
  • Ex. An accountant doesn’t file a tax return on time and the client files a claim for the resulting penalties and interest.

Media Liability Insurance

• Who it’s for:
  • Film Producers, Advertising Agencies, Video Game Publishers and Distributors, Radio & Television Distribution Broadcasters, Local Newspaper Publishers
• What it includes:
  • Copyright infringement, trademark infringement, plagiarism, piracy and limited coverage for other intellectual property-related violations. (This does not include patents, usually)
  • Defamation, including but not limited to libel and slander.
  • Privacy invasion and breaches of confidentiality
  • Other professional wrongful acts including negligence, unfair competition, deceptive business practices, disclosure of trade secrets, or breach of contract brought by your news source.
• When it’s relevant:
  • Ex. A politician files a claim for defamation against a film producer who made an unflattering documentary about him.
  • Ex. A claim is brought against a radio station for using copyrighted music without a license.

Medical Malpractice Insurance

• Who it’s for:
  • Medical Spas, Doctors, Pharmacies, Home Care, Imaging facilities, Rehabilitation Clinics, EMTs
• What it includes:
  • Covers negligent or unintentional breach of duty imposed by law, or Personal Injury, committed solely in the rendering of Professional Services by an Insured
  • Coverage for HIPAA violations
  • Coverage for claims related to sexual misconduct
• When it’s relevant:
  • Ex. A doctor improperly diagnoses a patient which leads to further complication and injury.
  • Ex. A client suffers burns while receiving laser hair removal and decides to sue the Med Spa.

Technology Errors and Omissions Insurance

• Who it’s for:
  • Software Developers, Network/Computer Security, Web Developers, SaaS Platforms, Web Hosting, Fintech
• What it includes:
  • Any negligent acts, errors, omissions, misstatements, misleading statements or
    Misrepresentation or unintentional breach of a contractual obligation that results in the failure of Technology Products to perform the function or serve the purpose intended
• When it’s relevant:
  • Ex. A client misuses your CRM platform and loses clients. Even though our product wasn’t the problem, you’ll have to defend yourself to prove that.
  • Your marketing product promises a 500% increase of traffic to your client’s website. The client sues because traffic only increases 200%.

Financial Fund Professional Liability Insurance

• Who it’s for:
  • Hedge Funds, Fund of Funds, Real Estate Funds, Venture Capital Funds, Private Equity Funds
• What it includes:
  • This is an Errors and Omissions & Directors and Officers Policy
  • Any advisory, management, administrative or other consultative services performed by an Insured for an Insured Organization or other third party
  • Any advisory or other consultative services related to the Insurance MSP sector, performed by an Insured for any Portfolio Company, encompassing, but not restricted to, guidance on the Portfolio Company’s capital structure, asset sales, stock issuance, contemplated financing or capitalization, financial reporting, risk management programs, or other operational and business matters, as well as legal services provided by an Insured Person acting as an attorney.
• When it’s relevant:
  • Ex. A PE fund breached the parameters outlined by the PPM after an investment which caused the target company to underperform.
  • The MP of a VC firm gives bad advice as an outside director to one of his portfolio companies, losing them millions in revenue.

Want to learn more about protecting yourself against potential malpractice claims?

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