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Professional Liability Explained
What is Professional Liability Insurance?
Professional liability insurance covers a consultant or contractor for claims arising from the rendering or failure to render professional services. These are often claims where nobody is injured and no property is damaged. They are claims for economic harm.
Because these claims are not covered by the consultant’s General Liability insurance, we require professional liability.
Other names for Professional Liability are Errors & Omissions, E & O and Malpractice.
When is Professional Liability Insurance Required?
Professional Liability is always required for
- Health care professionals (including mental health professionals)
- Insurance, Claims, Risk management consultants
- Technology Professionals
- Environmental consultants
Professional Liability is not required for
- Event planners & coordinators
- Interpreters & translators
- Data researchers
Professional Liability may or may not be required for some consultants.
The Professional Liability requirement is a judgment call based on an analysis of the situation. Some examples:
- Research Consultant: Professional Liability Not Required: A consultant gathers data for us, but does not provide professional advice. We use the data to make plans and decisions.
- Naturalist: Professional Liability Not Required: the naturalist gathers information and reports on changes in flora and fauna in our parks.
- Biologist: Professional Liability Is Required: Provides information on endangered species which is necessary for us to comply with environmental regulations. Incorrect information could lead to fines and penalties, litigation, or the loss of grant money.
Contact Risk Management (Outlook®: 139 kB) for assistance in determining if Professional Liability is required.
For attorneys, change the minimum professional liability limit in the Template to $1,500,000.
Professional Liability is very important when contracting with technology professionals. Below are examples of claims that are covered by Technology Errors & Omissions insurance, but are not covered by General Liability Insurance:
- Disclosure injury: unauthorized access to or dissemination of our private information;
- Content injury: intellectual property, trademark and/or copyright infringement;
- Reputation injury: disparagement of products or services, libel, slander, defamation and invasion of privacy;
- Conduit injury: system security failures that result in harm our system or the systems of those who access our system; and
- Impaired access injury: system security failure resulting in an our system being unavailable to users.
Indemnification Language in Technology Contracts
Technology professionals often try to amend the indemnification language in our agreements. The changes usually result in reducing their obligation to indemnify us for losses. Such changes could include capping the indemnification to the limit of their insurance policy or, even worse, to the cost of the agreement. It is very important to have proposed changes reviewed by County Counsel and Risk Management during the negotiation process.
Sometimes, technology professionals want to use their contract form instead of ours. We recommend resisting this whenever possible. Their forms generally offer us less protection than our own forms.