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Professional Liability Insurance: Frequently Asked Questions

By Lockton Professional

Insurance agent offering professional liability Insurance to commercial client.
(Photo by Getty Images)

You may need Professional Liability coverage for the services you provide. From disgruntled clients to fiduciary liability or even typos, the right coverage makes all the difference.


What is the difference between Professional Liability and E&O?


Professional Liability Insurance and Errors and Omissions Liability Insurance are the same things. It may also be referred to as Malpractice Insurance.


What do Professional Liability Insurance Policies Cover?


Coverage depends on the type of policy you purchase and your profession. However, most policies include coverage for the cost of certain legal fees and judgments/settlements that you may face as a result of claims and litigation brought against you based on the advice or services you have provided.


What is not covered?

  • Criminal or intentional acts

  • Liability assumed under contract, with the exception of a written fiduciary contract

  • inside Trading

  • Alternative Investments, with exceptions for some asset classes and Foreign Securities

  • Products not authorized by your broker/dealer

  • Performance Guarantee

Who is covered under Professional Liability policies?


Coverage extends to anyone providing covered Professional Services on behalf of your business. This includes your clerical staff and other employees, independent contractors working for you when the policy starts, and your Chief Compliance Officer.


Does Professional Liability Coverage include Cyber Liability Coverage?


Not typically. You can purchase comprehensive cyber liability coverage separately to cover the exposures of registered advisors.


Are the services I’ve provided to clients before starting a policy covered?


Often, you can receive coverage for your prior acts by matching your current coverage. However, if you are insured solely through your Broker Dealer, your prior acts coverage could be limited. If you are aware of circumstances that could result in a claim, these should be reported to your current insurer prior to binding coverage.


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Disclaimer: The analysis of coverage is in general terms and is superseded in all respects by the Insuring Agreements, Endorsements, Exclusions, Terms and Conditions of the Policy. Some of the coverage mentioned in this material may not be applicable in all states or may have to be modified to conform to applicable state law. Some coverages may have been eliminated or modified since the publishing of this material. Please check with your local Independent Insurance Agent for details.


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Proudly offering professional liability insurance in Northville, Ann Arbor, Canton, Detroit, Dearborn Heights, Garden City, Farmington, Farmington Hills, Inkster, Livonia, Novi, South Lyon, Southfield, Redford, Wayne, Westland, Wixom, Ypsilanti, Pittsfield, & Scio Township, Michigan.

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