Professional liability insurance (PLI), also referred to as professional indemnity insurance (PII) or errors & omissions (E&O), is a type of liability insurance often used by businesses to prevent having to bear the full cost associated with a negligence claim. Unlike general liability insurance which covers a variety of mishaps like third party injuries, professional liability insurance is a policy for professionals who make a living off their expertise. This generally includes people like lawyers, doctors, architects, engineers, IT consultants, and similar positions. Learn more about this form of business insurance and why you may need it as an expert in your field.
What Exactly Is Professional Liability Insurance?
Business owners and service-providing individuals may occasionally run into legal problems when a client claims negligence. This type of business insurance covers any legal expenses caused when a client or customer suffers a financial loss due to your services. Professional liability lawsuits can pertain to administrative errors, business partners, or negligent work. For example, if you were hired to enhance a client’s website and network security, but they are hacked just weeks later, the client will likely lose revenue from the site being down. Professional liability insurance can protect you from claims of negligence even if the mistake was not your fault.
Do All Businesses Need Professional Liability Insurance?
While not every business needs professional liability insurance, most can benefit from this type of business insurance. In short, any business that offers advice, skilled services, or products that require technical training needs PLI. This is currently the only type of insurance available that will protect your business from disgruntled customers and services-related errors. Mistakes can happen to anyone, and are often associated with miscommunication, omitting important information, or using the wrong materials for a job.
How Does Professional Liability Insurance Protect a Business?
This type of business insurance protects employers by paying for legal expenses in the event that you are sued for professional liability. Even minor lawsuits can cost you upwards of tens of thousands of dollars, depending on the length and complexity of the case. If your client is not willing to settle, the case may drag on and on, resulting in even higher legal fees. Every hour you spend on a case you will need to pay a lawyer hundreds of dollars. You may also be responsible for paying an expert witness, as well as paying for administration costs, travel expenses, court fees, and similar expenses.
Does Having Professional Liability Insurance Make Businesses a Target?
As a business owner, you may be hesitant to purchase professional liability insurance in fear that the coverage will make you a more likely target for lawsuits. However, this is not true. No one will know that you have professional liability insurance except you and those you tell. Therefore, you will not be named in a lawsuit merely because you have business insurance. However, if you are involved in a lawsuit business insurance can help ensure that you do not become financially drained.
What Does Professional Liability Insurance Cover?
Professional liability insurance covers a range of legal expenses. Essentially, the business insurance will cover your finances if you are involved in a legal claim brought on by a third party. If a client or customer claims that you have failed to complete your services, have found an error in your work, or claim that you have delivered substandard work, they may be able to sue you. Professional liability insurance will pay to have the claim thoroughly invested. It will also pay for the legal costs associated with going to court.
Is There Anything Professional Liability Insurance Does Not Cover?
It is important to note that professional liability insurance only covers civil lawsuits. Certain types of legal proceedings are not covered by the business insurance, including those associated with illegal or fraudulent activities. Professional liability insurance will also not cover intentional acts, such as the deliberate act of withholding essential information from a client or customer. In addition, this type of business insurance does not address lawsuits associated with property damage or physical harm. In some cases, the insurance will also not cover lawsuits caused by data breaches.
Do Businesses Need Both General Liability and Professional Liability Coverage?
If you already have general liability insurance, you may be wondering if you also need professional liability coverage. Depending on your job position, you may. While both types of business insurance cover civil lawsuits, general liability claims are often caused by physical harm, such as property damage or bodily injury. General liability insurance typically does not cover professional negligence. To ensure that you are covered in all areas, it is often best to acquire both types of insurance. Both can provide peace of mind and are a great way to safeguard your business.
How Much Does Professional Liability Insurance Cost?
Like most types of business insurance, you can expect the costs associated with professional liability insurance to differ depending on a variety of factors. Each carrier will evaluate your case differently in regards to your professional experience, industry, claims history, and customer base. It is not unusual to get different rates from different carriers based on this information. To ensure that you get a fair rate that is standard for your industry, it is best to do your research and compare rates from different carriers.
Why Call Business Benefits Group for Assistance?
If you are considering getting professional liability insurance for your business, contact Business Benefits Group of Fairfax, VA. Business Benefits Group, or BBG, is a full-service, hands-on agency that provides affordable and comprehensive insurance strategies for businesses in a wide range of sectors. Our clientele trust us to protect their businesses by providing specific coverage policies that are successful in mitigating the negative impact that can develop due to unexpected claims. For more information about professional liability insurance or any other type of business insurance, call BBG today. You can also request a consultation online by filling in our convenient form.