What Is Professional Liability on COI?

Liability insurance is a type of coverage that aims to protect your company and any third parties you hire against claims and lawsuits stemming from accidents.

While general liability insurance refers to coverage for physical liability risks such as bodily injury or property damage, professional liability insurance covers more abstract risks.

In this blog, we’ll discuss what professional liability insurance does and doesn’t cover, who needs it, and how to think about managing professional liability certificates of insurance (COIs).

What is professional liability on a COI?

Professional liability on a COI (certificate of insurance) is proof that a vendor carries Errors & Omissions (E&O) coverage—insurance that protects against financial loss caused by professional mistakes, bad advice, or failure to meet a professional standard. On a COI, it may be listed as “Professional Liability (E&O)” and will show the insurer, policy number, limits, effective dates, and often the retroactive date because this coverage is typically claims-made.

What Does Professional Liability Insurance Cover?

Professional liability insurance covers workers who provide certificate of insurance services or consultations to clients. It covers claims from professional mistakes and errors, misrepresentation, faulty advice, or failure to perform the expected professional duties.

There are a wide variety of situations professional liability insurance could cover, including claims arising from professional negligence, legal errors, client dissatisfaction, intellectual property infringement, and legal defense costs associated with defending claims.

What Does Professional Liability Not Cover?

For starters, professional liability insurance doesn’t cover anything unrelated to professional services. It doesn’t cover claims related to property damage or bodily injury, as those are covered by general liability insurance. It also doesn’t cover intentional wrongdoing, criminal acts, fraud, or anything of the sort.

Who Needs Professional Liability Insurance?

Workers in industries that provide services and expertise to clients should consider obtaining professional liability insurance. Some examples of people who could use professional liability insurance include medical professionals, consultants, legal professionals, financial advisors, and creative professionals, to name a few.

What Is Considered a Professional Liability Claim?

A professional liability claim is any legal action brought against a service provider for some kind of professional misconduct, such as errors, omissions, or negligence, especially when it results in financial losses for the purchaser of the professional services.

A few popular professional liability claims include:

• Breach of duty: when a client feels the professional failed to meet their contractual obligations.
• Misrepresentation: when a client alleges that the professional provided them with false or misleading information.
• Negligence: when a client claims that the professional didn’t meet the level of expertise expected of them or provided inaccurate advice that led them astray.

One way to reduce the number of professional liability claims coming to your desk is to start focusing on better tracking and management of your third-party COIs.

What Is the Purpose of a COI?

A COI, or a certificate of insurance, is a document issued by an insurer to someone receiving insurance. The purpose of a COI is to provide evidence of someone’s insurance policy; in other words, proof that they are covered.

For those hiring third parties, COIs help confirm that any vendor you choose to work with has the proper protections in place to cover them and your business from professional errors that could occur while working together.

If it’s someone’s professional liability insurance policy you’re worried about, in particular, a certificate of liability insurance is the document you’re looking for.

What Is a Certificate of Liability Insurance?

A certificate of liability insurance is a specific type of COI that provides proof of someone’s liability insurance policy. A certificate of liability insurance costs nothing as opposed to the policy itself.

Like other COIs, it will cover major details such as policy limits, effective dates of coverage, the name of the certificate holder, and other things such as additional insured endorsements if requested.

Unlike other COIs, under “coverage type,” it’ll read “professional liability insurance” rather than “workers’ compensation” or any other kind of policy.

What Should I Look For in a Certificate of Insurance?

As the business hiring third parties for a service, there are a few things you should keep an eye on when looking over vendor COIs. Once you’ve requested and obtained a COI from a relevant third party, be sure to confirm these portions of the certificate:

• Effective dates that match your timespan. These refer to the dates that the third party is receiving coverage. Make sure that coverage spans the entire duration of the project or partnership period or that you remember to request an updated COI proving timely coverage before the policy’s coverage lapses.
• Policy limits that meet your requirements. Do the coverage limits meet your company’s standards? Do they meet the regulations set by your state as they pertain to your industry? These are important things to consider to ensure that a professional meets your needs.
• Accuracy and validity that keep you compliant. Ensure the COI is valid and produced by a real insurance company (specifically, the one providing them with coverage). Although fraudulent COIs are rare, some vendors, unfortunately, try to “DIY” their certificates creating costly ramifications for the businesses that hire them.

How myCOI Can Help

Don’t get caught up with any of the compliance mistakes that can lead to big financial consequences. Let myCOI’s team of experts take professional liability COI management off of your hands. Contact us today to learn more about how our COI management services can help save you time and money today!

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