What Type of Professionals Need Professional Liability Insurance?
Most organizations constantly deal with the possibility of litigation regardless of the nature of the business or industry they belong in. Risk exposures are a constant threat, and the consequences can be severe and far-reaching. This is why the protection provided by professional liability insurance (PLI) is so essential.
Professional liability insurance covers expenses related to claims made by customers alleging inadequate or poor quality service. It is intended to protect the organization and its officers against claims of poor, late, or unfinished work. PLI is also commonly known as errors and omissions (E&O) insurance.
Risk exposures can lead to costly damage or liability claims, which often significantly impact a company’s finances. In some cases, the legal penalties can halt business operations for several months and possibly even result in the firm’s permanent closure.
As a business owner, you should be aware of these risks and the damage they could potentially cause. The knowledge you gain could help you avoid hefty settlements and litigation costs.
Why professionals should get professional liability insurance
No matter how well you run your business, there is always a chance of having a claim filed against you by a disgruntled client or customer. Whether or not the claim is justified, you could incur considerable legal and financial penalties if the court upholds the claim.
The financial toll of a lawsuit can be quite costly and affect your business for the long term. The resulting legal difficulties could affect you and your staff and officers and possibly even jeopardize your organization’s future. This is why you need the protection provided by professional liability insurance.
What does PLI cover?
Liability claims can arise due to disputes and allegations from clients and customers. The most common claims involve the following:
- Work errors or oversights
- Undelivered services
- Missed deadlines
- Budget overruns
- Incomplete work
- Breach of contract
- Accusations of negligence
Despite your best efforts, there will be times when you can’t help but miss a project deadline or submit work that doesn’t conform to client specifications. There may also be instances when factors beyond your control affect the timeline or quality of your work, leading to disputes with clients.
Professional liability insurance will come in handy for these and other related concerns. PLI essentially safeguards policyholders from the legal consequences resulting from unavoidable lapses or oversights, ensuring the company’s ability to continue operations and remain in business. PLI also protects the business owner’s assets from being included in the claim.
Professionals that can benefit from PLI
Professional liability insurance can be beneficial for most types of professionals. But they can be especially valuable for the following:
- Engineers and architects
- Financial professionals
- Real estate agents
- Doctors and other medical professionals
- Legal services providers
- Accountants, IT consultants, and software developers
How much does professional liability insurance cost?
The cost of professional liability insurance rates varies considerably depending on your company’s risk exposures or the risks you commonly face. Business consultants or engineers with relatively small staffs and client bases generally pay lower rates than accounting firms that serve multiple customers.
Other factors that could affect the rate of insurance include:
- Number of claims received
- Severity of injuries (if any)
- Company size
- The industry sector in which the company belongs
- Physical and geographic location
All these factors could have a significant bearing on the premiums that companies pay for professional liability insurance. At present, insurance costs about $59 per month. Owners of small businesses typically spend from $500 to $1,000 annually for errors and omissions coverage. It is a good idea to consult with your insurance agent to determine the different types of liability policies available to you and figure out how much coverage you need for your business.
Conclusion
Whether you’re starting a new company or you’ve been in business for many years, now is as good a time as any to get professional liability insurance. Few insurance policies offer the range and degree of coverage that PLI provides. So, if you are interested in protecting your business and personal assets from unexpected claims, getting this type of insurance is essential.
Of course, you will have to spend more on monthly insurance premiums than you are currently paying. Even so, the peace of mind that comes from knowing you are protected will be more than worth the added expense.
About Daniels Insurance, Inc.
At Daniels Insurance, Inc., we have a unique understanding of the risks that businesses like yours face on a regular basis. With the backing of our comprehensive coverages and our dedication to customer service and quick claims resolution, your business will be fully protected. For more information, contact us today at (855) 565-7616.