Communication may be the key to any business, but if it’s the sole backbone to your company, you may want to consider professional liability insurance. Words can be taken the wrong way or left out or miscommunicated all the time. So, it’s important if you’re consulting or giving professional advice, that you’re protected from the things that you say or don’t say. But how exactly can professional liability insurance protect you? Let’s take a look.
What is professional liability insurance?
Professional liability insurance is a type of business insurance that can help you if a client loses money due to your advice or lack of advice. It can also help you cover the legal costs of defending your business in court, whether you’re actually at fault or not.
Professional liability insurance is known by many names, including Errors & Omissions insurance or Professional Indemnity insurance. This coverage can also be industry-specific. For example, a doctor’s office may have medical malpractice insurance, or a lawyer might know it as LPL insurance.
What does professional liability insurance cover?
Sometimes the losses to a client aren’t due to property damage or bodily injury. Therefore, it falls outside of what a business’s general liability insurance can cover. If a client claims that they’ve lost money because of a slip of the tongue on your part, you could be held responsible for the extra money they’ve spent.
The most common claims that professional liability insurance can cover are those where a client claims:
- That a professional was negligent
- That the professional was not dealing in good faith
- That the client was given inaccurate advice
In some cases, these types of claims are reported by the client months or even years after the incident occurred. So, it helps that professional liability insurance can have retroactive dates of coverage. In this case, it means that your policy may only cover incidences that happened after a certain date in the past.
Who needs professional liability insurance?
There are tons of professions that can benefit from professional liability insurance. However, the most common occupations that have this type of insurance are:
- Home Inspectors
- Real Estate Brokers
- Financial Planners
- Print Shops
- Marketing Agencies
- Web Hosting companies
- Wedding Planners
- Professional Organizers
- Interior Designers
- And more!
Professional liability insurance, no matter the name, can also cover different types of risks depending on the industry. So, it’s important to get the right type of policy that fits your specific company.
How can I get the right professional liability insurance for my business?
When considering the type of professional liability coverage you need, you’ll want to consider the answers to the following questions:
- What types of services does my policy cover?
- What time frame is covered by my policy?
- Will my coverage change if my business is sold, merged with another business, or if my position changes?
- What’s excluded by my policy?
- Is there an option to extend the reporting period for incidents?
- Can the policy be customized or modified?
- Have there been any incidents that happened in the past that may result in a claim now?
Answering these questions can help your insurance agent get more accurate quotes and policies for the coverage you need.
How can I reduce the risk of professional liability claims for my business?
As a consultant or similar profession, you may have implemented various policies to avoid misleading your customers. Just make sure you follow these best practices for avoiding professional liability claims:
- Put everything in writing.
- Establish a high standard for quality control of your product or service.
- Keep your company records up-to-date with regular audits.
- Train your employees thoroughly and properly.
- Check in with your client regularly
- Answer any questions, concerns, or comments in a timely manner
- Get your customer’s informed consent. In other words, make sure that your client understands the product or service they’re receiving and get their explicit consent to perform your duties (when necessary).
We’ve all had to be wary of our words at some point or another. But when your business depends on more accurate communication than most, it’s important to stay clear and consistent with your clients and have the right type of insurance as a safety net. So, don’t miss out on the affordable professional liability insurance that can help save your business! Our agents are professionals at finding great rates on the coverage that fits your services. To start your free business insurance quotes, call us today, fill out our online form, or LiveChat with an insurance professional today!