Businesses involved in everything from marketing consulting to software development need to consider professional liability insurance coverage seriously. Anyone who is compensated for his or her expertise can be held liable. Even though professionals always try to do their best for their clients, mistakes do happen.

Professional Liability Insurance protects your company against financial losses from lawsuits filed against you by your clients. Professional liability insurance may also be called “errors and omissions” liability when it is limited to acts of negligence.

Other forms of professional liability insurance includes Employment Practices Liability insurance, (wrongful termination of employment, sexual harassment, and other employment-related allegations) and Directors and Officers Liability insurance (provides financial protection for the directors and officers of your company in the event they are sued in conjunction with the performance of their duties as they relate to the company).

Having professional liability insurance such as E&O is often a requirement by the client. D&O is insurance is often a necessity to attract board members of private and public companies to protect their personal assets.

Professional liability coverage is not provided under business owners policies.

Professional liability insurance policies usually include coverage for defense costs, even if a suit proves to have no merit. The costs of defending a law suit can be significant. A lawsuit filed against your business will quite often name both your business entity and you as defendants.

The professional liability insurance policy premium is usually based on the following factors:

• The industry
• Employees
• Annual revenues
• Location of the business
• Limit of liability requested
• The deductible