Environmental professional liability coverage protects environmental professionals from negligence and other claims. Typically, it is offered under the combined GL/CPL/PL product. It’s more difficult to get for demolition contractors; easier for those performing remediation or true environmental services.
The environmental professional liability market is currently stable, says RT Specialty’s Jeff Slivka, though insurers are paying attention to accounts with more design liability or exposures that surpass the market appetite for environmental coverage forms and are being more disciplined and consciously working to stay within appetites.
“There has been an uptick in discussions with firms now offering disinfection services associated with communicable diseases or COVID in particular,” Slivka says. “There are a handful of carriers that have come out with programs specific to these firms, providing affirmative coverage for COVID-related damages, in the past six months. Capacity is very restrictive and sometimes limited to a few million dollars, but affirmative coverage is offered nonetheless.”
What does professional liability insurance cover?
Professional liability insurance covers you and your business if a mistake is made while delivering on a service. This type of coverage is also called professional indemnity insurance and errors and omissions insurance (E&O). Specifically, professional liability insurance could help to cover claims of misrepresentation, inaccurate advice, and negligence. Whether or not your business has made an error, a client could potentially sue your company if it is believed a mistake was made. Without professional liability insurance coverage, you could be on the hook for costly legal defense fees. Usually, compensation payment will consider the financial losses a client has suffered.
Who needs professional liability insurance?
All small businesses selling expertise ought to consider purchasing professional liability insurance. This type of coverage protects smaller companies and the company’s bottom line from costly customer claims of incomplete, unsatisfactory, or late work – all of which could result in expensive lawsuits. In most cases, businesses that are most at risk and require professional liability insurance include architects; consultants; engineers; auditors or accountants; brokers or real estate agents; and insurance professionals.
By profession, here are the more standard reasons for client lawsuits – and why professional liability insurance might be a good idea:
Consultants. Typically, clients hire consultants to make projections and predictions, based on certain performance metrics. The consultant, however, could face legal action if his or her advice or miscalculation leads to the client’s financial losses. In this instance, professional liability would cover some of the costs.
Accountants. There is a lot of room for error in accounting. A professional liability policy would cover an accounting firm’s legal fees should a client sue over errors such as incorrect data entry and inaccurate reporting.
Architects. Like accountants, architects must keep track of a million different pieces – such as complying with construction specifications and local regulations or drafting building designs – leaving the possibility open to error. Professional liability insurance would cover legal defense costs in this instance, also.
Engineers. Engineering liabilities usually arise out of delivery delays, budget issues, or missed deadlines. A client could sue an engineering company for negligence if an important project falls behind the allotted timeline. In which case, professional liability insurance would provide coverage.
What is the average cost of professional liability insurance?
The average cost for professional liability insurance is roughly $59/month (or $713/year), despite policy limits. Since it excludes outlier low and high premiums, the median cost can offer a more precise estimate of what is likeliest for a company to pay than the more standard price of business insurance. Just over 50% of owners of small businesses pay roughly $500-1,000 annually for a policy, while just under 20% pay under $500.
A business can buy a more robust policy with higher premiums if the owner prefers a professional liability policy that will pay more per year or for each incident. For standard professional liability policies, claim limits can vary dramatically, anywhere from $250K-$2 million.
Professional liability insurance premiums, however, can vary dramatically, due to several factors, including the company’s occupation, size, types of activity conducted, and level of protection chosen. Based on these factors, premiums can start from as low as $270/annually.
How much professional liability coverage do I need?
The professional liability coverage a company would require – and the cost – depends on various factors, including number of employees, claims history, daily operations, type of business and level of risk, and coverage deductibles and limits. Generally, companies facing high risk spend a higher price for professional liability coverage. Conversely, for lower-risk companies, premiums are lower. An accounting firm, for instance, would likely pay less for insurance than a company that specializes in building design. Compared to architects, accountants are unlikely to make errors leading to legal action, from an insurance company’s viewpoint.
What is not covered by professional liability insurance?
It is crucial that you are aware of what professional liability does not cover. A few more common claims in which professional liability will not help are as follows:
Property damage and bodily injury. For property damage or bodily injury, companies should opt for a general liability insurance policy to cover the cost if the business damages someone else’s property or if a person is hurt on the business’s property.
Work-related illnesses and injuries. A company will require a workers’ compensation insurance policy if a worker gets sick or hurt from doing their job and need to recover to return to their job.
Data breach. Cyber insurance would be required if a company loses sensitive or confidential information about its customers or clients.