Professional liability insurance, also known as “liability insurance” or “liability coverage” is a type of business insurance that provides protection from third-party liability claims in the event that an insured professional is accused of negligence. Professionals who work in a field that poses a higher risk for potential legal action—such as doctors, accountants, lawyers, architects, and engineers—will most likely need to take out liability insurance. Even if your job doesn’t require you to deal with the general public on a regular basis (e.g., working as an office administrator in a private firm), it never hurts to be cautious and protect yourself against potential lawsuits from clients or vendors. If you operate your own business or are self-employed, you may qualify for additional tax benefits when purchasing liability insurance. Check with your accountant to find out more about what benefits you can get with your policy.
What Is Professional Liability Insurance?
Professional liability insurance protects you against claims of negligence or malpractice. It’s an important business expense that can help you stay in operation if you’re sued for damages. If you provide a service to your customers, such as accounting or law, you are exposed to the potential of a lawsuit even if you do everything correctly. If someone feels they were harmed by your actions or by your advice, they may take legal action against you. If you’re found to be at fault in the eyes of the law, and you don’t have liability insurance, you could be forced to pay for the other person’s damages out of your own pocket. Liability insurance will pay for their damages and keep you from going completely broke.
Types of Professional Liability Insurance
Professional liability insurance, otherwise known as “liability coverage,” is your best bet for covering against a third-party claim of negligence. While general liability insurance is not as specific and does not cover professional practice, it is important to note that it does cover things like product liability and commercial auto. Here are some common types of professional liability insurance: – Errors and omissions (E&O): These policies help protect you against claims of negligence, fraud, and misrepresentation. E&O policies work well for accountants, auditors, architects, consultants, engineers, financial advisors, lawyers, and other professionals who serve their clients. If you primarily work with businesses, you may want to consider an E&O policy over a professional liability insurance policy. – Professional liability insurance: This form of coverage protects against claims of malpractice. It is a broad, all-encompassing type of policy that is suitable for any professional who serves the public. – Medical malpractice insurance: This type of coverage is suited for medical professionals such as doctors and nurses. It covers claims of medical negligence and wrongful death.
Why You May Need Professional Liability Insurance
Anyone who provides a service to clients, customers, or the public will need this kind of policy at some point in their career. In fact, even professionals who are extremely careful and never make mistakes may run into trouble if their client or customer decides to take legal action against them. If you’re in a career where you deal with the public on a regular basis, such as being a doctor, accountant, lawyer, architect, or engineer, you will likely need to take out liability insurance. You should also consider this type of coverage if you are self-employed and work from home in case a client sues you.
How to Find the Right Type of Professional Liability Insurance
The first thing you should do when shopping for liability insurance is to find out what your insurance company offers. Most insurers require that you have general liability insurance before you add on professional liability coverage. After you’ve looked at your current policy, you can start shopping around for a new policy. It’s a good idea to get a free quote from at least three insurers before you make a decision. Be sure to talk to your insurance agent and see what types of policies they offer. Make sure that the policy you choose provides enough coverage for your situation. When comparing policies, make sure you’re comparing apples to apples. Make sure the policies are comparable and that you’re comparing the same coverage. Policies can look the same on paper but may be significantly different when you read the fine print.
How Much Does Professional Liability Insurance Cost?
Premiums for this type of policy vary depending on your profession and the coverage amount you choose. The more coverage you have, the more you will pay for your policy. If you have been in the same line of work for several years without any claims being filed against you, you may qualify for a preferred rate. You can also qualify for a preferred rate if you’re a new business owner, or if you’ve taken some business-related courses. The average cost of a professional liability insurance policy is about $1,200 per year for $1 million worth of coverage. Premiums for medical malpractice insurance are typically higher due to the potential risk of wrongful death lawsuits.
Conclusion
Professional liability insurance is an important business expense. Even if you are very careful with your work, accidents can happen. If you are sued for negligence, this type of policy will protect you from being forced to pay a significant amount out of your own pocket. Not all businesses are required to purchase liability insurance, but it is highly recommended. Whether you’re a freelancer, part of a small business, or a large corporation, you can benefit from liability insurance. It is important to understand the policy options and choose the right policy for your needs.
