What is Professional Liability insurance coverage?
Professional liability insurance can help protect Colorado small businesses if the owner or their employees are accused of negligence or make a professional error.
Professional liability insurance can help cover:
- Professional mistakes that cost a client money or cause financial harm
- Accusations of professional negligence such as wrongdoing or inaction
- Misrepresentation of your business’s services
Whether you made an error or a customer claims that you did, professional liability insurance may help cover associated costs in many different situations. For example:
- A Denver consultant makes a mistake in their paperwork which leads to a client making a terrible business decision, costing them $1,000,000. Professional liability insurance could help the consultant pay for legal costs if they need to defend their business.
- A client claims that a real estate agent in Colorado Springs neglected to list unsafe levels of radon detected on the property in a seller disclosure. The agent may be able to submit a claim to help cover costs related to the error.
What is the difference between Professional Liability and E&O insurance?
Another name for professional liability insurance is errors and omissions insurance, or E&O.
These terms are commonly used interchangeably. They usually refer to the same coverage, but which term is used varies by industry. Errors and omissions or E&O is used primarily by insurance agents, real estate agents and property managers. There is also a contractor’s E&O option for construction professionals.
Most other professions call this insurance professional liability, including accountants, consultants, engineers, lawyers and medical professionals.
Is Professional Liability insurance required in Colorado?
Most businesses in Colorado are not legally required to have professional liability insurance. However, this coverage is sometimes necessary to adhere to professional standards in certain industries.
For example, businesses seeking Colorado state or local government contracts may need professional liability coverage. Another common example is malpractice insurance. If you’re a healthcare provider, your employer may require you to have this type of professional liability insurance.
Colorado businesses can benefit from having professional liability insurance even when it’s not required. Business owners often choose this coverage for these reasons:
Financial protection
With Colorado errors and omissions insurance, small businesses may be better protected financially if they make a professional mistake or face accusations of negligence.
Work contracts
Depending on your industry, your clients may require a certificate of insurance before agreeing to work with you, especially on high-value projects. Without E&O insurance, Colorado businesses may miss out on potential jobs.
Licenses and permits
You may need a valid professional liability insurance policy to obtain certain business licenses or certifications.
For example, to obtain or renew a real estate license in Colorado, you must have real estate E&O insurance. Colorado allows companies with more than one broker to be covered under an umbrella E&O policy. However, terminating employment with that firm may result in the need to purchase an individual policy.1
What types of businesses might need Professional Liability in Colorado?
Many types of businesses offering professional services, such as financial advisors, contractors and real estate, choose professional liability as professional liability as common insurance coverage.
However, businesses in other industries can also benefit from this type of Colorado business insurance.
Any business that runs the risk of making a mistake that could hurt someone financially or has the potential to face accusations of negligence or wrongdoing could benefit from professional liability or errors and omissions insurance. Colorado business owners may choose this coverage to help protect their reputations and resolve conflicts quickly.
For example, a client alleges that a mistake you made in your architectural designs led to the collapse of a stairwell and sues you for causing injuries. Professional liability insurance can help cover related costs to rectify the problem.
Likewise, suppose a client sues an accountant in Lakewood for using copyrighted material in their advertisements. In that case, professional liability insurance could help cover related expenses or the cost of defending against the accusation.
How much is Professional Liability insurance in Colorado?
Several factors influence the cost of Colorado E&O insurance or professional liability insurance, including:
- The location where you do business
- The number of employees you have
- The type of work that you do
- Your work experience
- How high you set your policy limits
- Your history of insurance claims
At NEXT Insurance, it’s easy to get affordable Colorado professional liability insurance or E&O insurance online in approximately 10 minutes. Monthly premiums for this business insurance coverage cost $45 or less for 52% of our U.S. customers
Learn more about professional liability insurance costs.
How NEXT Insurance helps Colorado businesses
NEXT provides professional liability insurance policies for Colorado small business owners and self-employed workers.
It only takes about 10 minutes to get a quote, review your coverage options, choose your policies and download a certificate of insurance.
Start an instant quote online today.
Our team of licensed insurance advisors is standing by to assist you if you have any questions along the way.
