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Not sure who needs professional liability insurance? If your business offers professional services or advice to customers, you’ll need professional liability insurance. Some types of businesses that can benefit from this coverage include:
- Accounting firms
- Consulting agencies
- Real estate firms
What Is the Purpose of Professional Liability Insurance?
Every business owner tries to run their company perfectly, but mistakes can happen. If they do and the mistake financially harms your client, it can lead to a lawsuit. Professional liability insurance can help protect your business if someone sues you for making a mistake in your professional services. This policy is also known as E&O coverage and professional indemnity insurance.
Professional liability coverage is similar to medical malpractice insurance in that it helps cover claims that your business made mistakes or errors in the services provided. So, if you’re sued for a mistake or error, this coverage can help pay your legal fees and settlement costs. On top of this, professional liability insurance can help cover:
- Negligent acts
- Inaccurate advice
- Misrepresentation
To learn more about who needs professional liability insurance, get a quote today.
Is Professional Liability Insurance Mandatory?
In most cases, professional liability insurance isn't required by law. However, you may need this type of business insurance if your:
- Client requires it as part of a contract before work starts
- State has a law that requires it
- Industry requires coverage because of federal regulations
It's a good idea to check your state's laws to see if your business needs professional liability coverage. If you don't have coverage when it's required, you may have to pay a fine or penalty. You’ll also want to check and see if your business needs other coverages like workers’ compensation insurance or general liability insurance.
A Big Help for Small Business Owners
Interior Design Business
Jane owns an interior design business. Recently, a client's custom furniture didn't fit and now Jane is being sued. Luckily, Jane is an insured professional and has a Business Owner's Policy with professional liability insurance, which will help pay for her legal fees.
Many small business owners don’t realize the big benefits of professional liability insurance.
States and hospitals require healthcare professionals to carry professional liability insurance.
How Does It Help?
Professional liability insurance protects against common claims like negligence, misrepresentation and inaccurate advice. It will also help cover violations of good faith and fair dealing. If a client sues you, this policy may help pay your legal expenses.
To learn more about professional liability insurance, get a quote from us today.
Who Should Carry Professional Liability Insurance?
Any professional that runs their own business should carry professional liability insurance. A few industries that can benefit from this type of insurance coverage include:
Accountants
Accountants and tax professionals work with clients' financial information. Whether it's filing taxes or putting together financial statements, making a mistake can cause your client to sue your business.
Advertising Agencies
Advertising agencies work with clients to help boost sales or increase their visibility. If a campaign causes them financial losses, it could lead to a lawsuit. For example, if your advertising firm's campaign results in a sales drop, your client can sue your business.
Consultants
Consultants work with customers to help them achieve business goals. Sometimes a consulting agency's recommendation may not work out for the customer. It's important for consultants to have professional liability insurance because they provide advice and services to clients.
Graphic Designers
From logos and flyers to creating websites, graphic designers help bring clients' ideas to life. However, they can sue if they believe a graphic designer's work caused them to lose money.
Interior Designers
Interior designers oversee the work to bring a client's vision for their home to life. But mistakes, like missing deadlines or delays, can result in lawsuits.
Market Research Firms
Market research firms collect valuable information for their clients. If a recommendation or analysis is wrong, clients can sue the market research firm for damages.
Real Estate Professionals
Clients trust that their real estate agent or broker has their best interests in mind. If they decide they don't, they can sue an agency for mistakes in the professional services and advice given to them, especially if it costs them money.
Technology Professionals
Businesses rely on many types of technology to stay running. If the technology fails and negatively impacts finances, these business owners can sue the technology company that provided the equipment or software.
Get a Quote for Professional Liability Insurance
We're backed by more than 200 years of experience and have helped over one million small business owners throughout the country. Our insurance professionals understand your business' unique needs and are here to answer your questions. If you're looking for the right coverage for your business at the right price, we can help.
Whether you have questions about professional liability insurance or want to know what's considered a covered claim, we’re an insurance company you can count on.
Get a professional liability insurance quote today.