Understanding Professional Liability Insurance

Design firms face a myriad of risks to manage. Professional liability insurance (also known as errors and omissions insurance) is an essential tool that a design firm can use to protect itself from actual or alleged negligent acts in the performance of its professional services.

Professional liability insurance coverage requires special attention due to the unique nature of the coverage provided. Understanding your policy will empower you with precise knowledge of exactly what you're paying for and may even help improve your company's bottom line. 

Additionally, your understanding of professional liability insurance can help you purchase the right coverage to reduce the impact of claims. To avail the best professional liability insurance cost, you can also browse the Internet.

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Purchasing professional liability insurance is a very important decision. The premium for professional liability insurance can range from one to two percent of a business's revenue or even more. As insurance brokers dedicated to serving your industry, we understand the complexities of professional liability insurance for design firms. 

Q. What does a professional liability policy cover?

A. In general, the policy covers actual or alleged negligence in the performance of professional services. Failure to comply with your applicable industry standard of care will generally result in negligence. Professional services typically include Architecture, Interior Design, Engineering, and Surveying. 

Some policies also include Environmental Consulting, Construction Management and Technical Consulting as covered professional services. Insurance policies can differ widely. It is important to know what professional services you are covered to perform. You can find this in the definitions section of your policy under "Professional Services."

Another item worth mentioning is that many client written agreements include adverse indemnity wording which can put your company in the unfortunate position of being uninsured if such indemnity is triggered. 

Many indemnity clauses will make the design firm liable beyond the applicable standard of care. As your agent, we are available to review such contract wording free of charge.