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Professional Liability vs. Malpractice vs. E&O Insurance: How Are They Different?

One of the most confusing aspects of looking up insurance types is all the different terms you’ll see.  Possibly the most confusing is the difference between professional liability, malpractice, and E&O (errors & omissions) insurance.  They all technically cover similar types of errors, so you may often see them used interchangeably. But at the same time, different industries tend to use the terms differently or more frequently.  So below we’ll give an in-depth look at where these terms differ and where they may share similarities.

Professional Liability vs. Malpractice vs. E&O Insurance: Some Definitions 

To start, it helps to know some of the common definitions between these three terms.  We pulled some common definitions for each term:

Professional liability insurance: According to small business insurer the Hartford “Professional liability insurance helps protect you and your company against a claim that professional advice or services you provided caused a client or customer financial harm due to mistakes on your business’s part or because the business failed to perform some service.”

E&O insurance:  According to Nationwide, “E&O insurance generally protects service businesses from errors and/or omissions made by a business owner, employee or contractor working on behalf of the company.”  The Insurance Information Institute (III) also lists it as another name for professional liability insurance. According to Nationwide, E&O insurance is usually purchased by what is called “semi-professional occupations”.

To see the different types professional liability / E&O insurance, you can see our other articles here:

Malpractice insurance: According to the Hartford, “Malpractice insurance is a type of professional liability insurance. It provides coverage protection against claims of negligence or misconduct by physicians and other healthcare professionals, such as dentists, nurses, or physical therapists.”

According to Nationwide, there’s a logical reason for all of this overlap in the different terms.  Back under earlier insurance policies, doctors and lawyers bought professional liability insurance and E&O insurance was purchased by what Nationwide calls “semi-professional occupations.”  Now, professional liability coverage and E&O coverage are basically the same. 

Meanwhile, malpractice insurance is typically used in relation to the medical profession.  For instance, when you look up malpractice insurance through the III, you get a page detailing medical malpractice insurance.  In other industries, it’s typically just known as professional liability insurance or E&O insurance.  

However, you might also see malpractice insurance used in relation to the legal profession.  Often, lawyers will carry legal malpractice insurance. However, this is still just a type of professional liability insurance.  You might also see the term malpractice insurance applied to professionals that are more counseling-based; such is the case with social work malpractice insurance.

To learn more about different types of malpractice insurance, you can see our other articles at the links below:

The main point to remember is that all of these terms are a type of insurance that protects you in the case of professional mistakes committed under the scope of your professional operations.

How Much Does Each Type of Insurance Cost?

It’s important to note that professional liability, E&O, and malpractice insurance can have different premiums based on the type of profession you work in.  Some professions have larger risks and higher losses associated with them. For instance, a doctor could be sued for millions if their medical mistakes resulted in life-long paralysis or death.  However, someone who runs a cupcake shop stands a lower risk of permanently harming someone, so that often translates to lower premiums.  

Since E&O insurance is just another term for professional liability insurance, it makes sense to look at how much those cost together.  We ran a few quote comparisons for general professional liability (or E&O) insurance. For general reference, a sole proprietor business consultant with $35,000 in annual revenue cost anywhere from $41.66 per month to $63 per month when we compared between CoverWallet and CoverHound.  

As part of our medical malpractice guide, we looked at prices between several different companies.  Due to the specified nature of the product, it’s hard to find a general online quote.  Most companies want you to talk to an agent. However, we were able to get an annual premium quote from Berxi for $368, or about $30 per month, which is a surprisingly low rate for the high degree of risk involved with medical malpractice cases.  However, that was for an optometrist.

It just goes to show that it pays to shop around to see what types of premiums are available for your type of profession, location and that amount of coverage you want.   

Which Companies Offer Professional Liability, Malpractice, and E&O Insurance

Most business insurance companies offer professional liability (or E&O) insurance.  It’s a very common product needed by professionals and those who run small businesses.  You can see some of the top small business insurers who offer professional liability insurance in our guide.

Because malpractice insurance is a specialized product, you may have to look at different companies that handle what type of malpractice insurance you are looking for.  We’ve listed the top malpractice companies in our malpractice guides for each profession.

A major point to consider when looking at these types of products is just how much that company specializes in your industry.  Some business insurers are generalists, which means they tend to offer one main product that can then apply to different professions.  Others may write special policies depending on the profession.  

Then there are companies that only work with a certain type of profession.  For instance, a company may only offer medical malpractice. These companies allow you the option of getting the most specialized product for your industry.  However, it pays to look at how the premiums compare to more general products.  

Final Thoughts

  • To summarize, professional liability insurance covers you in case you are held liable for mistakes you made as part of your business operations. E&O is another term for professional liability insurance. Malpractice insurance usually covers mistakes made in the medical and legal fields.              
  • Costs for this type of insurance can vary based on the type of profession and the level of risk within that profession.  Certain professions will often need higher coverage limits, which can directly affect premiums.
  • Insurance companies that offer these products tend to fall into two categories: general business insurers and companies that focus on offering products within a specific profession.  It’s up to you which product makes the most sense for your budget, the amount of coverage you’re receiving and what is all covered in each plan.
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