Professional liability insurance covers abstract business risks. It is also called errors and omissions. The insurance is designed to cover professionals who share their expert advice and knowledge with their clients.
What is Professional Liability Insurance?
Professional liability insurance covers financial losses incurred through professional services.
For instance, an accountant files an incorrect tax return that costs the client a considerable penalty fee. Professional liability insurance can cover the financial loss on behalf of the accountant.
What is the Key Benefit of Buying Professional Liability Insurance?
The most significant benefit of professional liability insurance is peace of mind. In the case of an unfortunate mistake, the insurance plan saves you from financial burden and ensures business continuity.
Who Needs Professional Liability Insurance?
Any professional or a small business that provides a service for a fee should consider investing in professional liability insurance. This includes,
• Lawyers and attorneys
• Architects and interior designers
• Consultants (from any field such as financial, IT, security, etc.)
• Medical practitioners
• Web and graphic designers
Professional liability insurance is mandatory when you sign a contract to carry coverage. It is highly recommended for anyone who provides professional services and advice directly to clients.
Some professions may also be legally bound to invest in professional liability insurance.
What Factors Affect the Cost of Professional Liability Insurance?
Professional liability insurance covers defence costs, legal settlements, and awards. The following factors determine the cost of the policy.
• Industry risks
• Business risks
• Company size and number of employees
• Potential compensation award
• Claims history
• The overall value of active projects
Talk to an insurance brokerage firm to get an online business insurance quote.
What Does Professional Liability Insurance Cover?
Professional liability insurance covers financial losses incurred through,
• Professional Negligence: Committing an error or omitting a detail negligently while providing a professional service.
• Breach of Confidentiality: Misuse of confidential information without consent.
• Misrepresentation: Presentation of an incorrect piece of information that has led to financial loss or reputational harm.
• Copyright infringement:Unapproved use of patents, trademarks, and copyrighted material.
• Delayed Services: If your business fails to provide services promptly, resulting in financial loss for the client.
In a few rare cases, the client may misunderstand your intentions and sue your practice when there is no mistake on your part. Without coverage, you may end up paying a hefty sum from your pocket.
What Does Professional Liability Insurance Not Cover?
Professional liability insurance does not cover,
• Property damage
• Bodily injury
• Any work-related injury
• Intentional acts like fraud
• False advertising
What are the Other Ways to Protect a Business from Professional Liability Risks?
• Pay attention to detail.
• Double-check all the work before presenting it to the client.
• Implement proper quality control measures
• Educate your employees on the consequences of negligent mistakes.
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Beneficial Insurance Solutions is your one-stop shop for all insurance needs. We help you determine your coverage needs and provide a free online business insurance quote.
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