Professional Liability Insurance in Texas

What professional liability insurance covers in Texas

Professional liability insurance, also called errors and omissions coverage, pays when a client loses money because of a mistake, an omission, or bad advice in professional work. The harm is financial rather than physical.

What the policy answers:

• A negligent act, error or omission in the professional service the business was paid for
• A failure to deliver the service at all, or on time, where the client suffers a loss
• Defense costs, which commonly erode the limit rather than sitting outside it

Defense is usually the reason the policy exists. A Texas consultant who did nothing wrong still pays a lawyer to establish it, and the retainer arrives long before any finding of fault.

What a professional liability claim looks like

A professional liability claim starts with a client who is out of pocket and believes the professional caused it.

Claims that land on Texas policies:

• An accountant misses a filing deadline and the client pays a penalty
• A marketing agency runs a campaign that infringes someone else’s copy or artwork
• An engineer’s drawing is wrong and the contractor builds it that way
• A consultant recommends a system that does not do what the client was told it would
• An insurance agent fails to place a coverage the client asked for

Nobody is injured in any of those. Nothing is physically damaged. General liability pays for injury and damage, so it pays nothing here.

Why general liability does not answer a professional liability claim

General liability covers bodily injury and property damage to third parties, and the standard commercial general liability form excludes professional services outright.

The split is clean:

• General liability handles the client who trips in the lobby
• Professional liability handles the client who acted on the advice given in the meeting

Insurers attach a professional services exclusion to general liability on classes where the exposure is obvious, so Texas architects, engineers, accountants and consultants usually find that exclusion already on the policy. A firm carrying only general liability, reading a client contract that asks for errors and omissions coverage, has a gap rather than a limit problem.

Claims-made coverage and the retroactive date

Professional liability is written claims-made. The policy that responds is the one in force when the claim is made, not the one in force when the work was done.

Three dates control the coverage:

• The retroactive date, which is the earliest work date the policy will answer for
• The policy period, during which a claim has to be reported
• The extended reporting period, or tail, which a firm buys when the policy ends

A firm that changes insurers and loses its original retroactive date wipes out years of past work in a single renewal. Carry the retroactive date forward, and bring the expiring declarations page to the call.

What Aulona Insurance Group can place

Aulona Insurance Group places professional liability for Texas professional services firms, across the classes listed below.

Professions the agency writes:

• Legal practices
• Accounting and finance
• Business consulting
• Marketing and advertising
• Insurance agents
• Administrative support services
• Architects and engineers

A professional practice commonly needs general liability, property and professional liability together, so the whole account can sit on one submission.

Inside the small-business program: annual gross revenue under $5 million, total W-2 payroll under $5 million, loss history under $20,000 with no more than two incidents in three years, no prior carrier cancellation and no bankruptcy filing. New firms are accepted.

Where Aulona Insurance Group is not the right fit

Aulona Insurance Group cannot place professional liability for every Texas profession, and medical risk is the clearest line of all.

Where a professional liability submission stops:

• Hospitals and physician practices, which takes medical malpractice with them
• A profession outside the seven classes above, until the market for it has been checked
• A claim or circumstance already reported on the expiring policy, which the new insurer will exclude rather than price
• Anything that has to go to surplus lines

Revenue, payroll, loss history, a prior cancellation and a bankruptcy filing are the size tests in the section above, and they apply to this line like any other.

What moves the price of a Texas professional liability policy

The premium on a Texas professional liability policy is set by the insurer, not by Aulona Insurance Group.

What a professional liability underwriter prices from:

• The profession, because an engineer’s exposure and a bookkeeper’s are not comparable
• Annual revenue, and on some forms the number of licensed professionals
• The retroactive date, since a longer look-back covers more past work
• Claim history, including a circumstance reported but never turned into a claim
• The limit, the deductible, and whether defense costs sit inside the limit

Aulona Insurance Group publishes no premium on this site and does not rank insurers by price. The number comes from the insurer that agrees to write the risk, on the call with Luka Cenaj.