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Do You Have the RIGHT Coverage? Professional Liability & Management Liability Aren't The Same

The Difference Between Professional Liability and Management Liability Insurance

As a business owner you understand the importance of protecting your company, your employees, and yourself.  This often means going beyond a simple Business Owners Policy.  While Professional Liability and Management Liability may sound similar, they are unique coverages, and depending on your industry you may need one or both types of policies.

Professional Liability

Professional Liability Insurance is designed for businesses that offer professional services or advice to other business or individuals.  Also known as Errors and Omissions Liability (E&O), this type of insurance provides coverage in the event a professional is being held liable for advice given as negligent or inaccurate, for misrepresentation, or for violations of good faith and fair dealing.  Defense costs & Duty to Defend are typically included in Professional Liability but can vary depending on your individual policy.

Management Liability

Management Liability Insurance, also known as Directors and Officers Liability (D&O), provides extra coverage for directors and officers facing legal trouble for an action they took on behalf of the company.  Depending on your coverage this policy may extend to include Employment Practices Liability (EPLI), Fiduciary Liability, Cyber liability, and Special Crime such as kidnap, ransom, and extortion.

What is the Difference?

The simplest way to understand the differences between these coverage options is to look at who is covered by the policy.  Professional Liability can cover all employees or specifically named employees depending on your industry and the type of policy you get.  Inversely, Management liability only covers directors and officers – it does not extend to the rest of your staff.

Industries that commonly carry professional liability insurance include accounting, financial advisors, engineers, consultants, attorneys, architects, etc. but these are just a few.  Any industry that is offering advice as an expert should consider this policy. Management liability insurance, however, is beneficial to companies across all industries.

For more information on if a professional liability or management liability policy would be beneficial for your business please contact us.