If you sell products or provide services, you need professional liability. Your business can only benefit from this coverage.
Here, we’ll take a look at what Professional Liability covers, real-life examples, and costs.
What is Professional Liability?
This policy is often called “Errors and Omissions,” so if you see either, know they mean the same thing. Businesses need protection from professional mistakes, and this insurance type offers just that.
The worst-case scenario is a negligence lawsuit against your company. But, with this policy, you’ll be covered! A Professional Liability plan will help cover all costs and fees associated with the lawsuit, this includes legal fees and damages you have to pay. For businesses offering things like advice or services, it comes with the territory. An example of this would be a construction worker who is sued because a wall he built fell during a storm and the customer believes it was because of the companies negligence. A lawsuit like this has the ability to shut down a small business, but with professional liability, they would be covered!
This policy brings peace of mind, knowing that should unforeseen circumstances take place, you’ll be safe from the negative effects lawsuits bring to your company.
What is Covered?
While there could be exceptions, these are the typical circumstances covered by professional liability:
- Business Mistakes– If your client incurs losses, and your business is at fault, then the financial costs will be covered.
- Legal Costs – Should a lawsuit come your way, your company won’t have to pay the court fees or otherwise. This is regardless of the court’s decision.
- Negligence– Should you incur a lawsuit due to failing to meet a client’s standards, then you are covered.
You might think these don’t apply to your business, but reading further will give you a better perspective.
Example: Let’s say you’ve been contracted to clean office space for a client. Your staff was sent out, but the client calls back, complaining that the work was unsatisfactory. To make matters worse, the client purchased the cleaning before a work event, so they are blaming the loss of the event on your company. Then comes the lawsuit.
Now, this example seems unfair, but even in an unfair case, you’ll still be charged several thousand dollars in legal fees. Do you really want that for your company?
Example: You’ve performed surgery on someone but made a small medical mistake resulting in calling the patient back. The results are what you’d expect. While this mistake is human, it could cost you heavily in a negligence lawsuit. These range into over $100,000, especially with medical cases.
Example: Your business has a contract with another for financial advice, and you were confident that your advice would increase their profit margins, but it didn’t.
Now, the other company is suing you to make up for their own profit losses. Think this situation doesn’t apply to you? It can be any type of undelivered service. If you are promising something, simple human error or bad luck can intervene.
What Are the Costs?
Thankfully, professional liability is a less expensive option. However, you do want to keep continuous coverage to reap the benefits mentioned above.
For the average small business, professional liability will cost between $60-$80 a month–around $700 a year. This, of course, can be even less if the business is low-risk. If you run a high-risk business like construction, the costs can rise to nearly $2000 a year.
Purchasing professional liability is easy enough, especially with an agent on your side. They will have the most up to date information about what level of coverage your company really needs to keep you safe–without overspending.
EZ.Insure is here to help. Your agent will answer any questions you have, compare different plans for you, and even sign you up when you’re ready, free of charge and without having to worry about being hounded by endless calls. To get started simply enter your zip code in the bar above, or you can speak to an agent by emailing firstname.lastname@example.org, or calling 888-350-1890. EZ.Insure makes the entire process easy, and quick.
At EZ.Insure, we know that starting a business can be overwhelming, so we’re putting together an easy series for reference. If you need more information, see our Business Insurance Masterlist and our Group Insurance Guide.