How to make a professional liability claim

Professional liability insurance—also known as errors and omissions insurance (E&O) or professional indemnity insurance—is an important part of a business’s risk management strategy. This policy covers claims related to mistakes, oversights, or negligence in your professional services. It can pay for legal defense costs, settlements, judgments, and other legal fees associated with claims, even if the allegations are unfounded.

This type of coverage differs from general liability insurance or a business owner’s policy (BOP), which covers claims involving bodily injury, property damage, or advertising injury—not professional errors or service-related disputes. Professional liability coverage serves as an important safety net against the potentially devastating costs of client lawsuits that could threaten the survival of your business.

Filing a professional liability claim isn’t difficult, but it can seem daunting when you’re dealing with the stress of a client dispute. By following key steps, you can take advantage of the protection your policy provides.

Here’s what you need to do to file a professional liability insurance claim.

As soon as you become aware of a potential claim, you should contact your insurance agent or provider and let them know about it. It’s important to act quickly because the situation could escalate into a professional liability lawsuit if left unaddressed.

Your insurance provider will have you submit a Schedule B Professional Liability Claims Information Form with the following details:

• Date of the incident
• The client’s name and contact information
• A description of the services provided
• The nature of the allegation
• Any communication you’ve received from the client or their representative

Review your professional liability insurance policy to understand what is and isn't covered in your situation. The same kind of policy can provide different types and amounts of coverage, depending on the details.

Pay close attention to the policy language around claims made vs. occurrence-based coverage. Most professional liability policies are claims-made, which means they only cover incidents that occurred and were reported while the policy was active. If it’s occurrence-based, it will cover incidents that occurred during the policy period regardless of when they’re reported, even if the policy has expired.

Your professional liability coverage limits determine how much your insurance company will pay on a claim, including both your per-claim limit and the maximum amount your insurance company will pay for all claims during a policy period. You also need to know the deductible that must be paid before coverage applies to estimate your out-of-pocket costs.

Check to see if your policy has any exclusions, which may be certain activities, types of damages, or circumstances that are not covered. For example, a professional liability policy may exclude coverage for claims that arise from services outside your professional scope of practice.

Document everything pertaining to the incident to ensure there are no delays in processing your claim. The more information you can provide, the better your insurance company can assess the situation.

Examples of records you should keep include:

• Photographs or other visual evidence
• Contact information for all parties involved
• Client contract
• Invoices and payments received
• Client correspondence
• Employee or witness statements

Creating a written timeline of events leading up to and involving the claim can help to clarify what happened. Be sure to document the services you provided and when they occurred. Well-organized records can strengthen a policyholder’s position as their insurance company reviews the claim.

Consider consulting with an attorney who is familiar with handling professional liability matters. An attorney can review the claim, provide legal advice, and help you understand your options.

Seeking legal help early in the process can help you understand whether the claim is valid. An experienced attorney can also help you communicate with your insurance provider, ensure you're meeting all policy requirements, and determine if there are any factors that could reduce your liability.

Every profession has its own professional liability risks, and an attorney can help self-employed and independent contractors and other service providers understand the liability issues unique to their field.

For instance, contractors’ professional liability claims examples may involve allegations of design errors, failure to meet project specifications, or missed deadlines that resulted in financial losses for clients. Bankers or other financial services professional liability claims may include allegations of improper financial advice or a failure to disclose important investment risks to clients.

After filing your claim, you should limit any direct communication with the claimant to avoid making statements that could affect your case. Instead, direct all inquiries to your insurance provider who has experience handling these matters.

Carefully consider your options with both your insurance representative and legal counsel to determine the approach that best protects your business. Also, be sure to cooperate fully with your insurance company by promptly providing any requested documents or information to ensure the claim is quickly resolved.

If you run into any issues during the claims process, you can contact an Insureon agent who can help you find your policy information or answer any questions you have. We can also help you get a certificate of insurance whenever you need one.

To get free quotes for small business insurance from top-rated providers, complete Insureon’s easy online application today. We work only with trusted, A-rated carriers, which means you can depend on them when it's time to make a claim on your policy.