Professional liability insurance, also called errors and omissions coverage, may respond to certain claims alleging that professional services caused financial loss, subject to the policy’s wording, exclusions, and conditions. Coverage differs by policy and insurer. An owner should review the actual policy rather than rely on a proposal, certificate, or general description of coverage.
Ask a knowledgeable insurance broker to explain the policy’s covered services, limits, deductible or retention, exclusions, retroactive date, and reporting duties. Compare the listed services and jurisdictions with the firm’s actual work. If the firm adds a new service, enters another state, takes on design responsibility it previously avoided, or accepts unusual contract language, ask the broker whether the policy responds as expected. Ask counsel to review contract requirements and how they interact with coverage. A client’s requested insurance terms do not change the policy itself.
Many professional liability policies are claims made. That structure can make the policy period, reporting window, and retroactive date important. Ask what happens if you change insurers, sell the firm, retire, or stop practice. Discuss extended reporting coverage and continuity options before a change, since availability and terms vary. Notify the insurer promptly when the policy requires notice of a claim or circumstance. Keep a record of when notice was given and what information was supplied.
Review the claims process with the broker. Who should receive a demand letter or complaint? Who may speak for the firm? What should project staff preserve? Follow the policy’s requirements and obtain counsel where needed. Do not assume that an informal client complaint is harmless or that an insurer has been notified because a certificate was issued.
Insurance can help address covered claims, but it does not establish that work meets the standard of care or remove professional responsibility. Have the broker review coverage at renewal and when services, contracts, ownership, or locations change.
This is general education, not insurance, legal, tax, investment, or engineering advice; licensed PE judgment and local codes govern.
