| NYC Business Group
Professional Liability, Explained!
As a business owner, you strive to improve your business daily. It could take months and sometimes years to achieve a sustainable level of success. It will be a waste of all your hard work if a hateful comment from your employee to your customers lands you in court battling a lawsuit.
That is why most business owners protect their business with professional liability insurance. You should highly consider getting insurance if you sell your services.
What is Professional Liability Insurance?
Also known as Errors and Omission Insurance, or E&O, professional liability insurance protects businesses from customer claims. If one of your customers sues you, then professional liability insurance covers the cost of the lawsuit. The policy protects individuals from business owners' liability from claims arising from practices such as negligence, misrepresentation, and malpractice. Professional liability coverage offers protection to experts like accountants, physicians, or lawyers where their general liability policy is insufficient.
How Professional Liability Insurance Works:
Depending on your career, professional liability may have a different name. For instance, to medical practitioners, the policy is called malpractice insurance. To real estate agents, it is E&O insurance.
These policies are usually arranged on a claims-made basis. This means that you only enjoy the protection of the insurance policy if the claims are made during the period when the insurance policy is active. Therefore, any incidents before the policy became active may not be covered.
What Risks Does Professional Liability Insurance Cover?
A client may claim that your organization's or employee's negligence cost them a hefty loss. Following this claim, they may sue for compensation, which could mean a long, expensive, and tiring battle in court. A perfect example is when a wedding planner sues a florist for failing to deliver flowers to the wedding venue, resulting in conflict with the client and possibly terminating their contract. With professional liability insurance, you can hire a lawyer with ease.
Some of the claims that the professional liability covers include:
- Breach of contract
- Accusations of negligence
- Incomplete works
- Inaccurate advice
- Personal injury resulting from libel or slander
- Misrepresentation
- Budget overruns
- Missed deadlines, etc.
Businesses That Should Consider a Professional Liability Insurance
If you are a business owner, you may be wondering if you need professional liability insurance if you already have your general liability insurance.The short answer will be: The need for the policy depends on your business.
CONSIDER A SCENARIO;
A doctor who is knee-deep in the service industry bears a lot more business owner's liability than a hardware store owner.
Depending on your business, you can survive with a general liability cover without professional liability insurance. So, if you are in the professional service industry, you should look into getting a professional liability cover.
That means that you should make plans to find an affordable professional liability insurance coverage if you:
- Offer professional services directly to your customers
- Regularly advise your clients
- Sign a contract that requires you to carry coverage.
- This applies to consultants, doctors, lawyers, and other medical professionals.
Other businesses that should consider professional liability insurance include:
- Architects
- Insurance professionals
- Real estate agents
- Accountants/ auditors
- Consultants
- Market research firms
- Interior designers
- Advertising agencies
- Graphic designers
- Technology professionals
- Engineers
Some states even specify the professions that must have professional liability insurance during their operation. By contacting our office, we can guide you in what your business needs, in regards to coverage.
How Does Professional Liability Insurance Protect Your Business?
Getting professional liability insurance can benefit your business in many ways. Some of them include:
Protects your business from common risks-With this coverage, you can protect your business from common risks such as mistakes, omissions, errors, and breach of contract. So, when your employee mistakenly discloses some information about your client and you end up in court, you do not have to worry about the legal fees. Gives your customers confidence- Professional liability insurance adds to the professionalism of your business. It gives the impression that you are serious about your work and ready to defend your reputation and pride.
It offers protection, even when you are not at fault.
Sometimes, you face legal action when you are innocent. Even then, you must endure the long process and spend a lot of money on a lawyer to prove your innocence. Even in such situations, professional liability insurance has got you covered.
The premiums you pay for your professional liability insurance will, however, depend on your daily operations, the number of employees, coverage limits, the level of risk of your business, and your claim history.
Conclusion
Many small business owners make the mistake of ignoring the importance of professional liability insurance. And since you have learned the importance of it, you should go the extra mile to protect your business. Get yourself a good plan, and you will not regret it. Give us a call today for a Free Quote!