Professional Liability
One type of professional liability insurance is also known as Errors and Omissions Insurance and should be included as an essential part of your insurance program if the business is a type that provides professional advice or services. In order to arrange commercial general liability coverage, you will be required to carry adequate limits for errors and omissions insurance. Errors and Omissions Insurance provides coverage in the event your advice causes loss or injury to your client. Without this important protection, commercial general liability insurance may not be offered.

The second type of professional liability insurance is known as Malpractice Insurance and is generally used where the substandard conduct may result in bodily injury. Common professions where you'll find this coverage offered is with physicians and dentists. This malpractice insurance has seen a large rise in insurance premiums over the last several years due to the large number of lawsuits attributable to these types of professions.

Director and Officers Liability
Designed to help protect both the assets of the company and the personal assets of the individual, D&O insurance covers those liabilities that may result from an individual or group performing their task(s) as directors or officers. Anyone acting as a director or officer for a legal entity is covered under most plans. This includes positions of chairman, deputy chairman, president or vice president of the board of directors, the managing director, general manager, comptroller, secretary or treasurer and any other person who performs the corporate functions similar to those performed by an officer.

Depending on deductibles and other variables, D&O insurance can cost roughly $60 to $100 per employee per year. A typical deductible is $5,000. Therefore, it may be cheaper to take care of the more inexpensive problems without the insurance, and choose a higher deductible to save money in the event of a larger suit.

Practice Question:
Dennis owns a financial planning firm with two active traders that handle all client trades. He is worried that either of them could make a trading error that could cost him a large amount of money to correct the mistake. What type of insurance policy would help him transfer this risk?
A. Business General Liability policy
B. Umbrella policy
C. Professional Liability policy
D. Directors and Officers Liability policy

Answer: C
A professional liability policy is also referred to as an errors and omissions policy, these policies protect business owners in the event of employee professional service errors.



Worker''s Compensation

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