Header bg
Apollo logo
Apollo logo mobile
  • Tenant Insurance
  • Student Tenant Insurance
  • Homeowner's Insurance
  • Condo and Townhouse Insurance
  • Landlord Insurance
  • Get A Quote
  • Get A Quote
  • section background

    What Does Professional Liability Insurance Cover

    Hero bg 2
    What does professional liability insurance cover and not cover

    Professional liability insurance, also known as errors and omissions insurance, protects you from the financial consequences of lawsuits against your small business when the claim involves misrepresentation, negligence, or malpractice. It’s a crucial business insurance product to own as an entrepreneur or self-employed person. Facing a lawsuit due to a mistake you made could otherwise bankrupt your business if you aren’t prepared with the right policy.

    Suppose you make a mistake or your deliverable didn’t meet your client’s expectations. In this case, your client might sue for damages. This circumstance is where professional liability insurance kicks in to cover your legal costs.

    This post details the events that professional liability insurance covers and doesn’t cover. It further explains precisely what the policy pays for.

    What does professional liability insurance cover and not cover?

    Professional liability insurance protects any business owner or self-employed person from claims of negligence as a result of their professional services. Purchasers can range from accountants to hairdressers. Typically, you can expect protection from legal claims against you or your business for errors, omissions, or negligence occurring in your business’s regular conduct as long as the claim is within your policy period.

    Related: Is errors and omissions the same as professional liability

    The policy won’t cover lawsuits that general liability insurance covers. General liability insurance protects your business from claims related to property damage or bodily injury and for slander or libel claims.

    So suppose someone visits your accounting office and slips in the main foyer due to a wet floor. In this case, your professional liability insurance wouldn’t pay for lawsuit costs and damage awards. Instead, your general liability insurance foots the bill.

    Related: How much does professional liability insurance cost and who needs one?

    Need Professional Liability Insurance?

    Learn More

    Further, criminal liability isn’t covered by any of these insurance policies. Cyber security liability will also need its own separate policy. Cyber liability usually surfaces when a hacker or virus causes a data leak or loss of digital assets that generate clients or customers harm which results in a legal claim.

    Lastly, professional liability insurance won’t cover your employees’ work-related injuries or illnesses. Workers’ compensation insurance handles this.

    What does professional liability coverage pay for?

    Professional liability coverage firstly pays for legal defence costs. When a client sues, you’ll need a legal professional to defend against the claim. Lawyers easily cost between $300 and $1,000 per hour. The last thing you want is to foot these bills yourself.

    In some circumstances, the court will order you to also pay for your client’s legal fees. So not only are you responsible for your own lawyer’s costs but also the opposing party’s legal fees. Again, professional liability insurance can cover this amount.

    Your policy also pays for legal damages. If you are found liable for your client’s harm, they’ll expect compensation. This compensation can be for lost profits, consequential losses, and more. Your insurance covers these damages and the legal fees up to the policy limit.

    Related: What Is Professional Liability Insurance and How Much Insurance Do I need?

    Examples of situations that professional liability insurance covers

    **1. Missed deadlines**Clients have tight deadlines. They might need a graphic for next Friday to launch their new marketing campaign. Or, their website has to be up by the fifth of next month to prepare for a seasonal sales event.

    If you’re a graphic designer or web developer, missing these deadlines can cause a substantial loss for your clients. As a result, they might sue you if your inability to meet the deadline causes them to delay executing their other plans.

    Causing your client to miss their Black Friday sale could mean hundreds of thousands in lost profits. Without the proper insurance, the need to pay such damages could bankrupt you.

    **2. Mistakes and errors**A mistake or error has similar consequences to missed deadlines. Suppose the website you built doesn’t let shoppers finish their purchase. As a result, your client cannot make any sales for a week. In this situation, you may be responsible for their whole week’s worth of lost profits.

    Again, having to pay such damages could cause a significant financial fallout. Don’t forget you would further be liable to legal costs. However, the right professional liability insurance can pay these fees on your behalf.

    **3. The client blames you**Lawsuits don’t only arise when you make a mistake. They also occur when a client believes you were negligent. This situation can require you to hire a lawyer to defend yourself. Even if you’re in the right, you’re still liable to legal fees unless you have the proper professional liability insurance.

    Suppose the client doesn’t make their expected sales on their big discount event. They might point fingers and say that it was due to your graphics, which didn’t communicate the discounts properly. A legal claim can still leave you liable to lawyer fees and other court costs even if it wasn’t your fault.

    Professional liability insurance covers costs associated with legal claims for misrepresentation, negligence, or errors or omissions in your business. It won’t cover every type of lawsuit, so it’s essential to understand what other policies you need to protect against business risks.

    Related: Does professional liability insurance cover negligence?

    APOLLO Has You Covered

    We can help you understand the benefits of Professional Liability Insurance, and get the kind of protection you need in minutes.

    Learn More

    Originally published December 20, 2021, updated August 25, 2023

    Back to APOLLO Magazine
    Share this article

    Limited time offer: Get comprehensive Tenant Insurance starting at just $11/month

    Get no-nonsense coverage that's the best value for your money. Purchase in less than a minute, receive your policy instantly, and save when you buy online.

    Get a free quote

    4.6 rating

    Google Logo

    Limited time offer: Get comprehensive Tenant Insurance starting at just $11/month

    Get no-nonsense coverage that's the best value for your money. Purchase in less than a minute, receive your policy instantly, and save when you buy online.

    Relevant articles

    Toronto – apollocover.com – 1920×1080

    How Much is Tenant Insurance in Toronto?

    customize my tenant insurance canada

    4 Best Alternative Tenant Insurance Companies to CIBC Tenant Insurance

    financial goals canada

    How to Set Up Financial Goals

    are we in a recession canada

    How to Prepare for a Recession

    section background
    section background

    Getting insured is as easy as 1 - 2 - 3

    Tell us (very little) about yourself

    Tell us (very little) about yourself

    Just tell us your address, your name, email and phone number. And that's it. We'll give you a price in less than a minute.

    Pay online easily and securely

    Pay online easily and securely

    You can choose to pay monthly or save money by paying for the entire year in one easy payment.

    Get your documents in your inbox - instantly

    Get your documents in your inbox - instantly

    As soon as you complete your purchase, you'll find your proof of insurance and policy documents waiting for you in your inbox.

    Get covered today - it couldn’t be easier

    We’ve provided more than 1,000,000 quotes to Canadians just like you. Give it a try!

    Google Logo


    4.6 rating

    1,472 reviews

    view all

    Across Canada

    Contact Us
    Apollo logo

    © 2024 APOLLO Insurance Solutions Ltd.

    111 Water Street, Unit 210, Vancouver, British Columbia, V6B 1A7

    APOLLO Insurance Agency Ltd. (o/a APOLLO Brokerage in the province of Ontario only) is a licensed retail brokerage, offering our clients with a comprehensive set of insurance solutions to meet their individual needs. APOLLO Insurance Agency Ltd. maintains necessary corporate licensing in provinces across Canada. Availability of products and service depends on licensing and product availability. The information that appears on this page is provided for information purposes only. Advertised products and prices are not guaranteed and vary based on insurance provider and/or insurance company's discretion and product availability.

    Transparency and Disclosure: APOLLO Insurance Agency's role is to provide you with exceptional service and the best insurance products that suit your needs. As a licensed retail brokerage, our compensation is based on a commission basis already built into your insurance premium and varies based on the product purchased through our platform. For a description of how APOLLO Insurance Agency is compensated and how this is calculated, please refer to our Compensation Disclosure document. For consumers in Ontario, please review the RIBO Conduct Fact Sheet and the RIBO Conduct Guidance document.