Do I Need Professional Liability Insurance as a Fire Sprinkler Contractor?
If you have good general liability insurance protection you might think you have enough. However, professional liability insurance (also called E&O or Errors and Omissions) is something totally different than general liability. It covers areas that general liability does not.
What is Professional Liability Insurance or (E&O)?
Called a specialty line in the insurance business, PLI is a type of insurance developed to protect businesses and professionals from financial loss that arises from their negligence. It is very popular among doctors, lawyers, architects, etc. Professionals like them and yourself are held to higher standards. The coverage consists of four major segments:
- (E&O) Errors and Omissions
- Claims against you for negligence
- Awarded damages and defense costs
- Services delivered by all staff, including temporary employees
This article focuses on E&O insurance.
Why do I Need E&O?
E&O is for those who consider themselves experts in a particular area, in your case, fire protection via sprinkler systems. The possibility exists that your work could fail to meet the expectations of a client. This could result in a professional liability claim or lawsuit. PLI is designed to protect you from the major financial impact that could occur as a result of such an allegation or lawsuit.
Professional Liability Exposures
Exposures inherent in professional occupations vary considerably. They are different for a surgeon, for example, than a fire sprinkler contractor. That's why the underwriters examine a variety of factors in setting the premiums for each profession. They include location, company size, education, loss experience and operating standards.
The policy covers defense costs which can be quite substantial even if no liability gets assigned to you.
Professional Liability Insurers
Because of all of the variables, professional liability policies vary greatly and are offered by a wide variety of insurers. Some are called surplus lines or specialty insurers.
Whether you think you need professional liability insurance or not, you definitely need to have good general liability insurance. This insures you against claims made on your premises, or against your products and/or completed operations.