Professional liability insurance protects firms and professionals from financial loss or lawsuits resulting from errors or omissions in the course of their business. While it is not a legal requirement in most industries, it can be critical protection for those who may face such a claim in order to safeguard their business and financial stability. Continue reading to learn more about professional liability insurance and whether you need it.
What Does Professional Liability Insurance Cover?
Professional liability insurance protects you, your workers, and/or your organization from claims arising from errors or omissions in the services or advice supplied. This includes negligence, misrepresentation, or breach of contract, and can cover any litigation or settlement fees. It frequently offers protection and may cover the expense of legal defense.
What Are the Most Common Situations You Might Need Professional Liability Insurance?
Professional liability insurance is most commonly utilized in fields where professional negligence or errors are likely to be claimable, such as medicine, finance, and law. However, it can also help safeguard businesses in fields such as building, architecture, information technology, engineering, and media that unwittingly cause financial loss or injury to a third party. The most significant advantage of professional liability insurance is that it protects you against unforeseen legal procedures or financial loss.
Types of Professional Liability Insurance
“Errors and Omissions” or “E&O” insurance is the most prevalent type of professional liability insurance. This form of coverage will protect you if you make any mistakes or omissions while offering services or advice. It is crucial to emphasize, however, that this form of coverage only applies where an error or omission has happened. It does not cover losses caused by negligence, breach of contract, or fraud. Some professions may require supplementary coverage, such as Professional Indemnity Insurance (PII), in addition to E&O insurance. This sort of insurance protects experts in the event that their work injures or damages a third party.
How Much Does Professional Liability Insurance Cost?
The cost of professional liability insurance is determined by a number of factors, including the type of business you run and the coverage you require. Professional liability insurance can cost anywhere from a few hundred to several thousand dollars each year. It is critical to shop around and compare different policies to ensure that you are obtaining the coverage you require at a reasonable price.