Do you provide some type of professional service directly to customers and clients? If so, you are well-advised (and maybe legally obligated) to purchase professional liability insurance. This type of insurance is also known as Errors & Omissions (E&O) insurance or, in the case of doctors and lawyers, malpractice insurance.
Like any type of insurance, the protection you receive depends on what’s covered in your policy. If you haven’t purchased professional liability insurance yet, you should begin to investigate the basics of professional liability insurance and how to get the right policy for your business.
Then find the best business insurance at the best price with Quick Quality Quotes.
What is Professional Liability Insurance?
Professional liability insurance provides protection in the event of damage or financial loss to a customer or client (for example, if a bookkeeper makes a clerical error that leads to financial loss for the client).
The types of individuals and firms covered by professional liability insurance can include:
- Technology professionals
- Home inspectors
- Real estate professionals
- Financial consultants
- Any other individual or firm that provides professional services
Even if you have not actually made a mistake, your business can still be sued by a client and the legal fees alone could ruin your business. Consider that the average malpractice suit costs on average $122,000 in legal fees, while the average yearly cost of professional liability insurance for a small business is $1,735.60.
When you look at the big picture, professional liability insurance is a small price to pay to protect your business when mistakes happen or when a dissatisfied client opens a lawsuit.
Choosing the Right Professional Liability Insurance Policy
There is no one-size-fits-all policy that can protect every provider of professional services. The needs of a mid-size law firm are very different from, say, a freelance wedding photographer or an electronics manufacturer.
When choosing a professional liability insurance policy, you should consider many factors such as the size of your business, the type of business you are engaged in, the types of liability risk you are exposed to, and how much you want to be covered for in case “the worst” happens.
Professional liability insurance policies include a retroactive time frame that limits how far back your coverage will apply. If your retroactive date is one year and a client sues for something that happened two years ago, for example, you won’t be covered. The retroactive data is one of the most important considerations when looking for an online insurance business quote.
What Types of Errors and Omissions are Covered by Professional Liability Insurance?
No matter how qualified you are to provide a professional service, mistakes and misunderstandings happen between service providers and their customers and clients. Your professional liability insurance policy may not cover every imaginable situation, so it is important to know what you are covered for before you purchase a policy.
Also, professional liability insurance should NOT be confused with directors and officers & officers insurance (D&O) which only covers upper-level management.
Some general coverage areas for professional liability insurance include:
- Mistakes and negligence
- Misrepresentation or inaccurate advice
- Violations of privacy
- Oversights or faulty recommendations
- Defense costs in the event of a lawsuit
- Previously performed services
- Personal injury
- Copyright infringement
- Coverage for employees, temporary staff and/or independent contractors
There are also areas that are not covered by professional liability insurance, such as property damage, intentional wrongdoing, false advertising, workers comp, illegal actions and employment discrimination.
In other words, professional liability insurance is a specific type of insurance meant specifically for professional services. For small business owners, a business owner’s policy (BOP) can be a good way to bundle different types of insurance and trim costs rather than relying solely on professional liability insurance.
When looking for an online insurance business quote, do your research on the insurance company or broker and make sure that they have a track record with professional liability insurance. Check their A.M. Best rating, for example, and look for reviews on the ease of their claims process and what kind of customer service they provide. The policy you choose is only as good as the company behind it.
Do You Need Professional Liability Insurance?
As mentioned above, the cost of a professional liability insurance policy can be a small price to pay for peace of mind when it comes to protecting your business.
Mistakes happen, such as when a wedding photographer accidentally ruins a client’s photos, when a travel agency books a vacation on the wrong week or an architect chooses the wrong material and a building has to be re-built.
With the right business insurance quote from Quick Quality Quotes, you can be sure that you will be protected when mistakes and misunderstandings inevitably happen.
Don’t let one mistake or one bad client relationship ruin your business. Let Quick Quality Quotes help you find the best business insurance policies at the best price. Fill out the form below to get in touch with us right now!