As a professional, you work hard to provide your customers and clients with the best services and advice possible. However, when clients experience negative outcomes after using your services or advice, this could present a legal risk for you. No matter how large or small a business, without a Professional Liability Insurance policy, your financial position could be left vulnerable if a claim is brought against you.
Professional liability insurance protects you in this situation, allowing you to provide the best care for your clients. Gunn-Mowery provides a range of professional insurance options to help you with this type of coverage for your organization.
What Is Professional Liability Insurance?
Professional Liability Insurance is also referred to as Errors and Omissions Insurance and covers you and your business if you’re found to be or accused of being negligent in the professional services that you provided to a client or customer or if your company failed to perform or are accused of failing to perform a service.
Professional Liability vs. General Liability
General liability insurance won’t protect you against claims that arise out of professional or business practices like misrepresentation, malpractice or negligence. This is where professional liability insurance coverage becomes important and can provide your business with the coverage it needs.
What Professional Liability Insurance Covers
If you make an error in a service that you provide to a client or are accused of making an error even if you didn’t, a claim made against you and your business could have costly repercussions. What professional liability insurance covers are the costs that are associated with resolving these legal issues, like damages awarded and legal fees. It’s human nature to make mistakes, even for experts with plenty of industry experience.
Common professional liability lawsuits include:
- Errors or omissions
- Failure to provide services
- Breach of contract
What does Professional Liability Insurance generally not cover?
- Coverages offered by workers’ compensation
- Illegal, fraudulent or dishonest acts
- Intentionally wrongful acts
Carefully review your policy with your agent to determine what will be covered by your plan.
How Much Professional Liability Insurance Costs
Your insurance rate for professional liability coverage will depend on a few factors. These factors include:
- The industry or type of business
- Your claims history
- The policy coverage limits
- Your company’s location
- The policy terms
- The size of your organization
- The number of clients you have
- The number of employees you have
- The number of years your company has been in business
How can you reduce your professional liability insurance rate? The following can help you obtain a lower Professional Liability Insurance rate:
- Select a higher deductible
- Have a clean claims history
- Have a good credit score
- Establish a strong quality control system for your business
Your business will also need to cover any amount beyond the policy limit. For example, if you’re a photographer and you accidentally damage the wedding photos you took for a client, your client may pursue a legal claim against you. Professional liability insurance will protect your finances in this situation by covering the legal costs.
Who Should Have Professional Liability Insurance?
Who needs professional liability coverage? Many professionals and types of businesses should have Professional Liability Insurance. In fact, certain professions in some states require that professionals carry professional liability insurance.
If you are not required to have professional liability insurance in your state for your profession, you may still have clients who require your business to carry professional liability insurance before they will agree to work with you.
Essentially, if you provide services directly to clients, you may want to obtain Professional Liability Insurance. Even if you’ve done nothing wrong, clients can sue you if they believe they’ve received bad advice or inferior service from your company. If the client is not successful in pursuing their claim against your business, you will still face costly legal fees that professional liability insurance can cover.
The following are examples of professionals who will benefit from purchasing professional liability insurance:
Consultants and Coaches: If you are a consultant who offers advice to clients, you should purchase Professional Liability Insurance. This coverage will protect you against errors and omissions. The errors a client may cite against you include faulty recommendations, oversights and misrepresentation. Professional liability coverage will protect you financially if a client brings these allegations against you.
Fitness coaches and personal trainers will also want Professional Liability Insurance, as clients may be injured while under your supervision and file a lawsuit. If you work for a gym that offers liability insurance, you should carefully review what coverages are available to determine if you need to seek personal coverage.
Small and large law firms alike should carry Professional Liability Insurance. As a lawyer, you work directly with your clients, often in high-stress situations. During your career, you may have to combat a frustrated or angry client. As such, Professional Liability Insurance is essential coverage for lawyers.
Tax Preparers and Accountants
If you work in the financial industry, you should carry Professional Liability Coverage. Whether you are a certified public accountant, a bookkeeper or a tax preparer, you’ll want this coverage to protect you from liability or malpractice claims. Whatever the size of the accounting firm, businesses offering financial services to clients will want to carry Professional Liability coverage.
Home Inspectors and Contractors
No matter how much experience you have as a home inspector, you may still make mistakes. As such, you’re at risk for facing a potential lawsuit from the clients you work with if a mistake occurs or if they believe a mistake occurred.
Contractors also need Professional Liability coverage. The process of constructing buildings is a complex one, which means several issues can arise along the way. Mistakes that add to the cost of a construction or delays completion could result in a lawsuit.
Real Estate Agents
Real estate agents should also have Professional Liability Insurance. This will help protect real estate agents and agencies against losses from performance in services, negligence or errors and omissions.
Do you work in the Information Technology field? If so, you may be sued by clients or customers when technology fails and impacts the services you are able to provide. Professional liability insurance will protect your business against risks of accusations of errors and omissions.
Creative professionals like photographers may want to obtain Professional Liability Insurance as well. You may miss an appointment with a client, deal with technical difficulties during a client’s event, lose an important memory card or accidentally damage photos. If the client believes you didn’t deliver the quality of services that they expected, they may file a claim against you.
If you’re a freelance photographer, affording a settlement or legal help could be especially difficult, which makes obtaining Professional Liability Insurance essential.
The Benefits Professional Liability Insurance Offers for Professionals
What are the benefits of carrying Professional Liability Insurance? Professional Liability coverage can help you with a number of financial issues associated with a claim, including:
1. Greater Business Opportunities
Some clients will refuse to work with your business unless you are protected by professional liability coverage. Additionally, you may wish to hire someone like an independent contractor or temporary employee who won’t agree to work with you unless you carry professional liability insurance.
Your business will demonstrate professionalism by carrying professional liability insurance, which will make clients and contractors more likely to work with you. This insurance coverage shows your clients that your organization can back up the quality of your work.
If you have a small business, professional liability coverage also can help you stand apart from other small businesses that offer similar services, which means you’ll be more likely to get a potential client’s business.
2. Investment Protection
Regardless of who is at fault, Professional Liability Insurance can help cover the considerable defense costs required in a malpractice or negligence lawsuit. This means your finances will be protected in the event of a lawsuit.
Depending on your industry, you may need Professional Liability (also known as Errors and Omissions coverage) to protect yourself from legal claims stemming from previous work, future work and current work so you are protected even if a claimant waits until the statute of limitations is almost expired before initiating legal action.
Particularly if you have a small business, Professional Liability Insurance can protect you from expensive lawsuits. Small businesses can be more financially vulnerable when a client makes a liability claim, as a small business may struggle to pay for legal assistance or for settlements. By carrying professional liability insurance, you’ll ensure that your small business won’t have to pay out of pocket for the legal expenses of a lawsuit (beyond the deductible).
3. Protection for Your Team
If you are accused of failing to perform services or are accused of negligence through the services you provide, Professional Liability Insurance can help. If you work with independent contractors, temporary employees or full-time employees, you can seek professional coverage to ensure their advice and services are covered, too.
By ensuring financial protection for your organization, you’ll also be protecting your team from layoffs or your business going under. If you are a small business owner with a few employees or independent contractors, having Professional Liability Insurance can give your employees greater peace of mind about working for your company and potentially increase your employee retention.
By purchasing Professional Liability Insurance, you’ll demonstrate to your team that you value them and support their work.
The upside of working with Gunn-Mowery is that we are an independent insurance agency, bringing you a range of options, and we work hard to provide you with the services you need. Whether you require just negligence insurance or whether you want to have previous work covered, too, we can find your custom solution. That’s the Upside of Insurance.
Obtain Profesional Liability Insurance From Gunn-Mowery
Procuring Professional Liability Coverage for our clients at Gunn-Mowery is just the start. Helping our clients understand important exclusions in coverage helps many of our clients manage risk better.
Comparing and contrasting carrier coverage forms is a skill few of our competitors have and this is what sets us apart.
Understanding the nuances of claims made coverage forms, their unique coverage triggers and the resulting importance of retroactive dates, reporting periods and when and how to report claims are all part of the Upside of Insurance at Gunn-Mowery.
If you are a professional and don’t have Professional Liability Coverage, act now so you’re not caught by surprise with a legal claim. Contact us at Gunn-Mowery for a free quote to ensure you are covered now and in the future.