Have you ever heard of the term professional liability insurance or errors and omissions (E&O) insurance? Essentially, these two terms describe an insurance policy that mitigates the risk of lawsuits resulting from professional services and negligence claims.
This type of insurance protects business owners and professionals from financial responsibility stemming from potential allegations, including negligence, malpractice, or misrepresentation claims.
Any professional with experience in offering specific services to clients requires a liability policy. In this article, we discuss how professional liability insurance protects you, and why you should invest in it.
What does professional liability insurance protect?
Professional liability insurance is a policy that protects professionals providing advice or services to clients in exchange for a fee from negligence and other claims. Professionals like accountants, architects, IT consultants, lawyers, photographers, physicians, and real estate, are all at risk for potential claims brought against them.
This kind of liability insurance focuses on providing protection against financial loss stemming from lawsuits. It does this by providing you with coverage against any legal claims that aren’t included in general liability insurance or commercial general liability insurance policy. This specialty coverage isn’t included under your homeowners, business, or business-owners insurance and must be purchased separate.
In the event of a lawsuit, this policy pays for damages awarded against you, your legal fees, and any costs related to lost wages and defense costs. It helps protect your business from various potential allegations, including negligence, malpractice, or misrepresentation claims. It’s important to keep in mind that it will only cover claims made during your policy period.
Professional Liability Insurance?
Why should I get professional liability insurance?
The truth is, mistakes can and do happen. You should invest in a professional liability insurance policy for your peace of mind, and to make sure you’re covered in case of a liability claim.
There are four common scenarios where you’ll want to have professional liability coverage:
- When you provide a service late. Professional liability insurance covers claims and associated costs of any delays in service that caused a financial loss to your client.
- When your client blames you. If a client claims your work resulted in losses to their business, you could face a lawsuit from them to recuperate their losses. Professional liability coverage will help you by paying for the damages.
- When you have to take the stand in court. If your business is found liable for negligence or bodily harm against the client, you’re going to face a costly lawsuit. However, with professional liability coverage, your insurance company will bear the brunt of any legal costs.
- When you miss an important detail. Unfortunately, mistakes can happen even if you’re careful. If you make a mistake or overlook something important, your client may sue you for not receiving the agreed-upon work. Professional liability coverage protects you financially from costs.
Professional liability policies also operate on a claims-made basis. Meaning your coverage is only good for claims made during your policy period. However, some policies may include a retroactive date.
If you’re worried about property damage or bodily injuries at your office, then professional liability insurance won’t cover you. Instead, you’ll want to invest in a good general liability policy.
Additionally, your liability coverage won’t include criminal prosecution, cyber liability, data breaches, or other technology issues. You can purchase separate insurance for cyber security and other technology-related concerns as a separate policy.
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We can help you understand the benefits of Business Insurance, and get the kind of protection you need.
