Business is thriving. You keep things in order and strive for excellence every day. When offering your service, you always have the best interests of the client in heart. Nevertheless, despite your best efforts, mistakes can occasionally happen when operating a business. If one of these mistakes causes your customer to suffer financial loss, they have every right to sue your company for those losses. With this potential risk in mind, it’s critical to understand how a professional liability insurance policy may shield you from unintentional mishaps. If you interact directly with clients or provide any form of professional advising, professional liability insurance, which also can be known as errors and omissions insurance, is a must-have.
What is Professional Liability Insurance, and what does it cover?
A professional liability policy, as opposed to a general liability policy, which guards your company against losses due to property damage or bodily injury, is intended to shield you from mistakes that could be made when giving professional advice or performing professional services. These two policies are designed to complement one another.
The purpose of professional liability is to protect against unintended acts of negligence, misrepresentation, poor advising, and clerical errors. These are routine business activities if you work directly with clients. Consider how frequently a customer will call and ask a question throughout the day. Each of these phone calls, texts, or emails places your company at risk for a professional liability loss. Below are a few samples of professional liability claims to provide you with an idea.
- An architect made a mistake on a blueprint rendering for a building which led to faulty design, cost overruns, and project delays.
- An accountant making an input error on a tax return costs the client thousands in penalties and fees from the IRS.
- Website developer makes an error in their code for a client’s website costing the client countless dollars in sales.
- Missing a critical hazard during a house assessment by a Home Inspector.
- An electrician giving wrong advice on the acceptable type of system a building needs.
- A land surveyor professional providing incorrect plans for land grading & retaining walls.
The examples highlight the significance of professional liability insurance by demonstrating the fact that claim exposure can occur in any business. Speaking with an experienced insurance professional about your business can be beneficial if you’re seeking concrete examples of your sector. Not only through giving examples, but also by assisting in reducing the recurring risk that comes with operating a successful business.
What is NOT covered by Professional Liability Insurance?
Professional Liability insurance has exclusions, just like any other insurance policy. It is simply one piece of the puzzle when trying to adequately secure your business because it is intended to cover a specific type of loss. It is a metaphorical tool in your tool belt. Examples of what professional liability policies don’t cover are given below, along with the actual business insurance policy that will protect you from that kind of loss.
- Bodily Injury or Property Damage (General Liability)
- Workplace injuries or illness of an employee (Worker’s Compensation)
- Data Breach or Cyber-attack on your business (Cyber Liability)
- Damages to your business property (Business property/BOP)
- Any auto-related incident (Commercial Auto)
- Intentional Acts/ Fraud (There will never be coverages for damages done on purpose)
How do you purchase Professional Liability or obtain more information on it?
The best course of action is going to be to speak with an experienced independent agency. An independent agent will have access to numerous professional liability markets and will assist you in determining which solution is best for your business. Experienced independent agents can also help you avoid financial loss by providing a better understanding of risk management. They will also know the right questions to ask to ensure that you are properly protected. Contact any of The Staples Agency’s professional liability experts when you’re ready to talk about safeguarding your company. We will be honored to put together a comprehensive plan to safeguard your business from unforeseen events.