Exploring Professional Liability Insurance for Service-Based Businesses

Professional liability insurance is generally accessible for businesses that provide fee-based services.

Professional liability insurance is a type of company insurance that covers you if a customer sues you for an alleged error or inappropriate advise. Errors and omissions insurance is another name for it.

Professional liability insurance is required if you give services to customers for a fee. Here's what this insurance covers and where you can get it.

What is covered by professional liability insurance?

Errors and omissions insurance is another name for professional liability insurance. It can protect firms from the following types of claims, as well as pay litigation and settlement costs:

Professional negligence is defined as the failing to satisfy a level of care:
Assume that an architecture company creates a branch for a small bank. A year later, the bank is sued by a client for failing to comply with the Americans with Disabilities Act, or ADA. 

The bank may sue the architecture company for violating professional standards. More information about architect insurance may be found here.

Failure to provide on time a promised service:

Assume a factory employs an IT consultant to manage a cybersecurity update. The consultant says that it will be completed by the end of the year, but they are unable to meet that deadline. 

The factory is hacked in January, after the project was meant to be done according to the contract. The facility might sue the consultant to recover the expenses of the security violation. Learn more about consultant professional liability insurance.

Breach of contract:

If an insurance agency's contract states that it will assist clients in settling claims but does not have adequate employees to do so when the time comes, clients may allege that the agency breached the contract. Learn more about insurance agents' E&O insurance.

Errors:

Medical malpractice insurance is a sort of professional liability insurance that covers claims of professional mistakes. For example, if a nurse gives a patient the incorrect dosage of a drug, the patient or their family may sue. Learn more about the cost of medical malpractice insurance.

Professional misconduct in general:

If a college lecturer consistently marks one student harder than their colleagues, and that student is unable to graduate on time, the student or their parents may sue the instructor.

Professional liability insurance safeguards your company regardless of whether legal claims are deemed to be valid. Your coverage may pay out in both frivolous and substantiated cases.

Professional liability plans, unlike certain other forms of liability insurance, usually cover against claims of financial losses rather than bodily harm or property damage. Medical malpractice insurance, however, is an exception, as are coverage for architects and engineers.

What does professional liability insurance not cover?

Professional responsibility does not shield a company from:

• Customers or clients who suffer bodily harm or property loss while conducting business with you; for example, if they slip and fall in your office or their personal data are destroyed in a fire. These are claims for general liability insurance.

• Employees bring lawsuits alleging wrongful termination or workplace harassment. A company will require employment practices liability insurance for these.

• Fraud or criminal behavior. The subsequent professional responsibility claim is not covered if you or one of your employees commits a crime or willfully misleads a client.

What is the purpose of professional liability insurance?

Anyone who charges a fee for professional services or advice to customers confronts the risks that professional liability insurance covers. This list may include the following items:

• Accountants.
• Architects.
• Management and information technology consultants are examples of consultants.
• Engineers.
• Financial or investment consultants.
• Agents and brokers in the insurance and real estate industries.
• Graphic designers and software developers.

Medical malpractice insurance may be needed by law for medical practitioners. This type of professional liability insurance expressly covers doctors, dentists, nurses, psychologists, and other medical professionals from allegations that they committed a mistake that resulted in the damage or death of a patient.

Other professions may also require professional liability insurance. State licensing boards, for example, may compel attorneys to carry legal malpractice insurance or to inform customers if they do.

What is the cost of professional liability insurance?

According to the internet insurance marketplace Insureon, the median cost of professional liability insurance is $59 per month, although costs might vary. According to Progressive, new Progressive insurance customers paid a median of $42 per month in 2021.

The cost of professional liability insurance is determined by the following factors:

• How often are lawsuits in your industry?
• The location where you work and the frequency with which claims are filed.
• How much coverage is required.
• How many workers do you have?
• How long have you been in business?
• What types of claims, if any, have you submitted in the past?

Getting a quotation is the best method to find out how much professional liability insurance will cost your company.

How to Find the Most Appropriate Professional Liability Insurance:

All major insurance firms, in general, provide professional liability or errors and omissions insurance. whether you currently have company insurance, ask your provider whether you can supplement it with a professional liability policy. Multipolicy discounts are available from some insurance carriers.

However, we suggest obtaining numerous business insurance quotes in order to discover the best pricing and coverage.