As a business owner, you have enough to worry about. Insurance shouldn’t be a part of those worries. Business insurance is designed to mitigate risks and protect your business without having to create a headache for you. This is true for liability insurance. You need a plan but purchasing one doesn’t have to be a confusing process. This is what you need to know about professional liability insurance and how it works for your business.
What is Professional Liability Insurance?
Professional liability insurance is a type of commercial insurance that protects your business against claims of negligence, which can be known as errors and omissions. Many businesses should consider obtaining this type of insurance because it prevents them from having to bear the full cost of defending against a negligence case initiated by a client. It can also be used to mitigate the costs of damages that are awarded as a result of the case.
Depending on the plan, professional liability insurance can also cover:
- Mistakes and oversight
- Undelivered services
- Missed deadlines for services
- Breaches of contract
How Professional Liability Insurance Works
How professional liability insurance works depends on your profession. If you are a doctor or a lawyer, your plan will generally protect you against malpractice lawsuits brought by clients. If you are a financial investment adviser, your plan can protect you against cases of financial mismanagement by your clients.
Some of the many professions that use professional liability insurance include:
- Healthcare
- Legal
- Architects and engineers
- Teachers
- Accountants and investment advisers
What is and is not covered by a policy can vary based on the size and scope of the policy and the industry in which your business operates. In general, policies are structured on a “claims made” basis; claims not brought during the policy period are not covered. Liability insurance will also not cover claims that involve criminal prosecution.
It’s important to understand the scope of coverage in your policy so that you do not leave your business vulnerable to certain lawsuits.
Disclaimer: this is for informational purposes only and is not intended to be legal advice. If you need legal counsel, please contact an attorney directly.
Need professional liability coverage? We can make it easy. Let The Patrick J. Thomas Agency structure a plan that protects your business.