Business Insurance 101: Understanding Professional Liability Coverage

Business Insurance

Starting your own business is a daunting and often stressful process. With so much at stake, it is important to make certain your business is properly protected. Unfortunately, even the process of choosing insurance policies can seem overwhelming.

No one wants to pay for coverage they don’t ultimately use, but it’s also dangerous to purchase too little and leave the business vulnerable to expensive lawsuits. A business is liable for any errors it makes, after all— which is why it is so important to have professional liability insurance covering operations.

What Does Professional Liability Insurance Cover?

Professional liability insurance, also known as errors and omissions insurance, protects professionals from claims from clients of negligence and other service-related mistakes. Should a client file a claim against your business, your insurance policy will pay for your legal defense expenses.

Business Insurance
Business Insurance

Claims covered by most professional liability insurance policies include:

  • Negligence– When a professional breaches the industry standard for duty of care
  • Malpractice– Negligence or incompetence of a medical professional
  • Misrepresentation– A false statement that informs a third party’s decision to sign a contract
  • Inaccurate advice

It’s important to note that professional liability insurance does not cover the following:

  • Criminal prosecution
  • Some forms of civil prosecution
  • Cyber liability

Do All Businesses Need Professional Liability Insurance?

Depending on the nature of your business, you may not need this form of insurance or may only need a small amount of coverage. Some industries and professions carry much higher degrees of risk than others, so it is important they look out for themselves along with their clients.

For example, doctors, lawyers, and accountants all need liability insurance due to the severe consequences that can be caused by even the smallest mistake.

Not all businesses are as clear-cut examples as those listed above, and it can sometimes be hard to figure out if this sort of policy is applicable to your business situation. As a general rule of thumb, if the business provides a service, then it is likely exposed to professional liabilities.

Even fitness instructors could find themselves on the wrong end of a lawsuit if their clients end up injured due to their instruction. A few other business types that may need coverage include:

  • Accountants
  • Architects
  • Engineers
  • Designers
  • IT consultants
  • Financial consultants
  • Marketers and advertisers
  • Counselors

How Much Does Coverage Cost?

There are a number of factors that play into how much a business’s liability insurance policy will cost, so the final number could vary drastically across different industries or even amongst competitors.

How long a business has been in operation, what their claims history is like, and where they operate are just a few of the elements that are taken into consideration when determining the cost. For example, an experienced family physician in the country will likely have lower rates than a new surgeon in the city. The same can be said for many other professions, as well.

One way a business owner can lower their insurance costs is by implementing high-quality training and quality assurance processes. Insurance companies love to see proof that their policyholders are performing their due diligence and can take it into account when producing a quote, so be sure to accurately document these initiatives.

Before settling on one policy for your business, be sure to request professional liability insurance quotes for small businesses from multiple insurers so you can compare coverage and rates to ensure you get the best deal.

Assessing the Risks for Your Profession

With each industry carrying with it its own risks and insurance requirements, it is important to conduct thorough research into the needs of your business. You might find your business does not require the extra protection of professional liability coverage, but the last situation you want to find your business in is the losing side of an expensive lawsuit without the available protection. Consulting an insurance expert can help you figure out which policy is right for you.

Sarah Williams

Sarah Williams is a CEO and Author of one of the Top Leading Website Sggreek.com. I fond to write on Tech, Lifestyle, Business, Entertainment, Health etc.

Customized Stickers
Business

5 Reasons Why Customized Stickers Are Perfect For Branding

Are you starting out as a business or want to redefine your old one? If yes, how do you plan to go about it? I’m sure you must be pretty confused. But don’t worry, the best is yet to come!  I’m going to mention tell you how you can use customized stickers to your advantage […]

Read More
Business needs SEO Services
Business Digital Marketing Tips SEO Tips

Reason why your business needs SEO Services

Nowadays, the technique of systematically optimizing your website for search engines is known as SEO. When implemented and handled properly, an SEO plan can increase your company’s exposure and lead generation. Over the past years, the field of digital marketing has grown rapidly. Every company is vying for a better position on search engine result […]

Read More
Truck Insurance in a Logistic Business
Business Insurance Tips

What is the importance of truck insurance in a logistic business?

Accidents happen when you least expect it. The best way to recover from any damage or loss is to be well-prepared financially. Making goods move steadfastly from one point to another is a monumental task in a logistic business. Thinking about a truck insurance cover might not concern you much the way other things do […]

Read More