How would your business respond—and survive—if it made such a severe mistake that it cost a customer tens of thousands of dollars? Or, even more frustrating, what if a customer blames—and sues—your professional services firm for losses when you’re not at fault?
Professional Liability insurance, also known as Errors and Omissions (E&O) coverage, is designed to protect your business against claims that professional advice or services you provided caused a customer financial harm due to actual or alleged mistakes or a failure to perform a service.
In addition to responding to your customer’s financial losses, professional liability coverage can help your business:
- Pay legal expenses. Whether your business is at fault or not, legal costs can add up. A professional liability policy can help your firm cover unexpected legal fees—for valid claims and frivolous suits alike.
- Manage claims. Your professional liability insurer can help your business respond to claims and guide you through arbitration or litigation.
- Meet contractual requirements. Many corporate service contracts require professional service providers to carry professional liability coverage.
- Compete. Carrying professional liability coverage can give you a competitive advantage by giving your customers an extra level of security.
What Types of Businesses Need Professional Liability Insurance?
Any business that provides its clients with expert guidance, information, or knowledge-based services—such as a bookkeeper, marketing consultant, or executive recruiter—can benefit from professional liability coverage. Certain specialized or licensed businesses like law firms, architecture and engineering firms, and software development companies can find professional liability solutions designed specifically for their sector. Likewise, in-house attorneys or corporate counsel can seek professional liability coverage under an employed lawyers policy, while media organizations such as publishers or broadcasters can seek coverage for their intellectual property through a media liability policy.
A broader range of service providers can seek coverage under a Miscellaneous Professional Liability (MPL) policy. Even if your business works in a highly specialized niche, an insurer that provides MPL coverage may be able to write a customized policy for your specific needs, tailored to fit your services.
What Types of Claims are Made Against Professional Service Firms?
Professional liability claims range widely—from a business demanding a refund from a tax preparer that filed its federal tax returns but failed to complete state and local returns, to a manufacturer suing a consultant for recommending costly investments in new equipment that failed to lower production costs. However, they are generally based on a customer’s perception that a professional services firm has:
- Failed to complete expected tasks. A customer expects a services firm to complete a greater scope of work than what was delivered, resulting in losses to the customer.
- Provided erroneous guidance. A customer claims that it suffered financially because a professional services firm provided inaccurate, incomplete, or misleading information or guidance.
- Fallen short of promised results. A customer incurs financial losses when the results forecast by a professional service provider are not met.
Your business can also help prevent professional liability claims from arising or limit their severity by taking key steps to limit errors and disputes in the first place. Read “Seven Steps to Limiting Professional Liability Claims” to learn more, and explore Chubb’s professional liability solutions here.
Travelers 1st Choice+® for Professionals
As professionals operate in today's increasingly litigious environment, you could easily be subject to allegations by unhappy clients who may feel they've been harmed by their actions or inactions. Travelers 1st Choice+® provides exceptional professional liability/errors and omissions coverage that can be customized to the unique risks faced by an assortment of professionals.
Applications and Forms:
Accounting Professionals
Applications
- Pick-A-Premium Application - Complete this application only if the firm: 1) has gross annual revenues of $100,000 or less, and 2) has revenue derived only from Bookkeeping/Write ups/Payroll, Review, Compilation, Personal Financial Planning, Investment Advisory, Tax-Business, Tax-Individual, Tax-Estate and Trust, Management Advisory, Hardware/Software Consulting and Sales, or Forensic Accounting/Litigation Support/Investigative Accounting Services.
- New Business Application
- Renewal Application
- Acknowledgement and Acceptance of Competitor's Application
- Specified Client or Project Additional Limit
- Limit or Deductible Change Request Form
Supplemental Applications
- Audit Services Supplement
- Claim, Suit or Incident Supplement
- Executor, Administrator, and Trustee Supplement
- Insolvency Supplement
- Outside Interest Supplement
- Personal Financial Planning and Investment Advice Supplement
- Securities Supplement
- Separate Entity Supplement
State Application Notices
- California
- Illinois
- Minnesota
- New York - Claims Made
- New York - Defense Within Limits
Sample Policy Forms
- Specimen Policy
Design Professionals
Legal Professionals
Applications
- Lawyers Small Firm Application - New and Renewal. The Lawyers Small Firm Application is for firms with 10 attorneys or less, requesting $2,000,000 or less in each claim limits, and have no services in Class Action/Mass Tort, Securities or Bonds, or Patent.
- Lawyers New Business Standard Application
- Lawyers Renewal Standard Application
- Acknowledgement and Acceptance of Competitor's Application
- Specified Client or Project Additional Limit
- Limit or Deductible Change Request Form
Supplemental Applications
- Claim, Suit or Incident Supplement
- Estates and Trusts, Plaintiff, and Real Estate Supplement - for use with the Small Firm Application
- Additional Location(s) Supplement
- Bankruptcy & Collections Supplement
- Entertainment Practice Supplement
- Environmental Practice Supplement
- Estates & Trusts Supplement
- Fee Collection Supplement
- Financial Institutions Practice Supplement
- Intellectual Property Practice Supplement
- Large Law Firm Supplement
- New Attorney Information Supplement
- Oil/Gas/Minerals Supplement
- Outside Interest Supplement
- Plaintiff Litigation Practice Supplement
- Real Estate Practice Supplement
- Securities Supplement
- Tax Supplement
- Title Agency Supplement
State Application Notices
- California
- Illinois
- Minnesota
- New York - Claims Made
- New York - Defense Within Limits
Sample Policy Forms
- Specimen Policy
- Specimen Policy - for New York insureds only
Real Estate Professionals
Applications and Supplemental - Coverage is not available for firms domiciled in CA, HI and LA
- Real Estate Services New Business Application
- Real Estate Services Renewal Application
- Pick-A-Premium Application - Only for firms of $100,000 or less in gross commissions and fees.
- Real Estate Professional Other Services Supplement - To be completed with New and Renewal application if Property Management, Auctioneerng, Appraising, Vacation Rental, or Construction Development Services are offered.
New York Only
- Real Estate Services New Business Application
- Real Estate Services Renewal Application
- Real Estate Services Small Firm Application - Only for firms of $500,000 or less in gross commissions and fees.
- Real Estate Professional Other Services Supplement - To be completed with New and Renewal application if Property Management, Auctioneering, Appraising, or Vacation Rental Services are offered.
- Sale of Certain Constructed or Developed Property Supplement - To be completed with New and Renewal application if Constructed/Development services are offered.
State Application Notices
- Illinois
- Minnesota
- New York - Claims Made
- New York - Defense Within Limits
Sample Policy Forms
- Specimen Policy
- Specimen Policy - for New York insureds only
Miscellaneous Professional Liability
Miscellaneous Professional Liability coverage is designed to protect a wide variety of professionals. Please refer to MPL applications and industry specific supplements below.
Applications and Forms:
Miscellaneous Professional Liability
Professional Liability for Financial Institutions and Insurance Companies
Travelers provides Professional Liability errors and omissions coverages for Financial Institutions and Insurance Companies.