Take this quiz to test your knowledge of professional liability insurance. The answers and explanations are at the end; no cheating!
1. Professional liability insurance is also known as (choose all that apply):
A) Malpractice insurance
B) General liability insurance
C) Errors and omissions insurance
D) Employment practices liability insurance
2. Only health and legal professionals need professional liability insurance.
True or false?
3. Professional liability insurance does NOT cover:
A) Claims of negligence
B) Employee injuries at the workplace
C) Misrepresentation accusations
D) Inaccurate advice
4. Your client meets you at your office. It’s been raining. A small puddle has formed at the doorway. They slip and fall as they walk onto the hardwood floor in the waiting area. They sue you for their physical injuries. Your professional liability policy responds to this claim.
True or false?
5. You can extend a professional liability insurance policy to cover you after a policy expires.
True or false?
6. Professional liability insurance policies automatically cover all employees and subcontractors.
True or false?
7. The cost of professional liability insurance depends on all of these factors EXCEPT:
A) The company’s size
B) The company’s claims history
C) The color of the company logo
D) The types of services provided
8. Premium payments for professional liability insurance can be deductible as a business expense.
True or false?
9. Professional liability insurance is NOT included in which of the following:
A) Workers’ compensation insurance
B) Business owners policies (BOPs)
C) Commercial auto insurance
D) All of the above
10. A professional liability insurance policy covers claims made while your policy is active. This means the policy is written on a:
A) Claims-rejected basis
B) Claims-accepted basis
C) Claims-made basis
D) Claims-avoided basis
Answer key, with explanations:
1. A & C. Errors and omissions (“E&O”) insurance and “malpractice insurance” are the same type of policy.
2. False. Many professions need this, not just doctors and lawyers. Architects, contractors, marketers, accountants, nurses, technology consultants, web designers, event planners and therapists are just a few occupations that need professional liability coverage.
3. B. Workers’ compensation insurance covers employee injuries.
4. False. Physical injuries that happen on your business premises are covered by general liability insurance.
5. True. You can buy an extension to cover claims made against you during your policy period, even after it expires. This is coverage that goes beyond your policy’s termination date. It’s also known as an “extended reporting period (ERP),” “tail coverage” or “retroactive coverage.”
6. False. Some policies require individuals to be named on the policy. Others have specific terms that allow you to include all employees and subcontractors. Tell your broker about other employees and contractors you want to cover. Double-check that they’re included in the policy.
7. C. The color of the company logo doesn’t matter. All the other factors can affect the cost of your policy. It’s based on how much risk your company bears.
8. True. Many business insurance premiums, including professional liability, are tax deductible. The Internal Revenue Service considers business insurance a cost of doing business. Check with your accountant for more information.
9. D. Professional liability isn’t included in any of the insurance coverages listed. You’d need to purchase it separately or as an add-on.
10. C. Professional liability insurance is written on a claims-made basis. This means it responds to claims made while the policy is active. Say your policy is active from February 2024 through January 2025. You’re covered for claims made between these dates, regardless of when the error was committed. But you wouldn’t be covered if you had a claim in March 2025 for an incident that occurred in April 2024. (Exception: You would be covered if you added an extension or ERP for incidents outside your policy dates.)