Professional indemnity insurance, also known as “liability insurance” or “liability coverage” is a type of business insurance that provides protection against third-party claims in the event that an insured professional is accused of negligence. Professionals who work in a field that poses a higher risk of potential lawsuits—such as doctors, accountants, lawyers, architects, and engineers—will most likely need liability insurance. Even if your job doesn’t require you to regularly deal with the public (for example, working as an office administrator in a private company), it never hurts to be cautious and protect yourself from potential lawsuits from customers or suppliers. If you run your own business or are self-employed, you may be entitled to additional tax benefits when purchasing liability insurance. Ask your accountant to find out more about the 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 business if you’re sued for damages. If you provide a service to your clients, such as accounting or law, you are exposed to the potential of a lawsuit, even if you do everything correctly. If someone feels they have been harmed by your actions or by your advice, they can take legal action against you. If you are found to be at fault in the eyes of the law and you do not have liability insurance, you may be forced to pay for the other person’s damages out of your own pocket. Liability insurance will pay for their damages and prevent you from going broke.
Types of Professional Liability Insurance
Professional indemnity insurance, otherwise known as “liability coverage,” is your best bet for covering a third-party negligence claim. Although 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 auditors, accountants, architects, consultants, engineers, financial advisors, lawyers, and other professionals who serve their clients. If you primarily work with companies, you might consider an E&O policy rather than professional indemnity insurance. – Professional liability insurance: This type of coverage protects against malpractice claims. It is a broad, comprehensive type of policy suitable for any professional serving the public. – Medical malpractice insurance: This type of coverage is suitable for medical professionals such as doctors and nurses. It covers medical negligence and wrongful death claims.
Why You May Need Professional Liability Insurance
Anyone who provides a service to customers, clients, or the public will need this type of policy at some point in their career. In fact, even professionals who are extremely careful and never make mistakes can run into trouble if their client or customer decides to take legal action against them. If you are in a career where you deal with the public on a regular basis, such as being a doctor, accountant, lawyer, architect, or engineer, you probably 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 need to do when shopping for liability insurance is to find out what your insurance company offers. Most insurance companies require you to have general liability insurance before adding professional liability coverage. Once you’ve looked at your current policy, you can start looking for a new policy. It’s a good idea to get a free quote from at least three insurance companies before making a decision. Be sure to talk to your insurance agent and see what types of insurance they offer. Make sure the policy you choose provides adequate coverage for your situation. When comparing policies, be sure to compare apples to apples. Make sure the policies are comparable and that you are comparing the same coverage. Policies may look the same on paper but can 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 occupation and the coverage amount you choose. The more coverage you have, the more you pay for your policy. If you have been in the same industry for several years without a claim being made against you, you may be entitled to a preferred rate. You may also qualify for a preferred rate if you are a new business owner or if you have taken some business-related courses. The average cost of professional liability insurance is about $1,200 per year for $1 million in coverage. Premiums for medical malpractice insurance are typically higher because of 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 pocket. Not all companies are required to purchase liability insurance, but it is highly recommended. Whether you are a freelancer, part of a small business, or a large company, you can benefit from liability insurance. It is important to understand the policy options and choose the right policy for your needs.