Regardless of how much training and experience you have in your chosen professional field, you are human — which means you could make a mistake that causes a client some degree of harm. Fortunately, there is a type of insurance that can protect you and your business from legal action as a result of a professional mistake. Called professional liability insurance, this insurance coverage is a must-have for any professional with expertise in a specific area, such as accountants, architects, insurance agents, financial advisors, engineers and any type of consultants.
If you are considering acquiring your first professional liability insurance policy, here is everything you need to know about this essential form of coverage.
What Is Included Under Professional Liability Coverage
Professional liability insurance goes by a number of different names in different industries. For real estate professionals, for example, professional liability coverage might be called errors and omissions insurance. For medical professionals, it is best known as malpractice insurance. Though the details of a specific policy may vary, the general details of this type of insurance coverage remain relatively stable. You can expect your professional liability insurance to cover liabilities such as:
- Mistakes, errors and oversights in provided services
- Undelivered services or missed deadlines
- Negligence or failure to meet established standards
- Breach of contract
It is worth noting that professional liability insurance does not necessarily provide comprehensive protection for your entire business. There are some types of mistakes and errors that this type of insurance does not cover, such as:
- Employee or customer injuries or damages
- Business property damage, to include business vehicles
- Employee discrimination lawsuits
- Data breaches and other technology-based issues
Wording within insurance policies can be confusing, intentionally or not, so you should have help with properly interpreting the details to ensure that you receive coverage that appropriately suits your needs. It might be useful for you to use your business’s attorney to review and compare prospective professional liability policies before you choose one to keep you safe.
How to Use Professional Liability Insurance
Once your professional liability insurance is active, you will be covered against the types of errors detailed in your policy. However, to receive coverage, you will need to know how to make claims with your insurance provider. Generally, insurance providers only extend coverage to claims made while policies are active, which means that even if an incident occurred during a period in which you were covered, if you allow your insurance to lapse before you file a claim, you will not receive any protection or support. Only rare occurrence policies allow you to file claims after coverage has lapsed, and you will pay a premium for this privilege.
Different insurance providers have different processes for filing claims, so you will need to contact your provider to understand exactly how you should file a claim for a rapid and thorough response. You may need to call a help line, or you may need to submit documents through a web or app portal. In any case, you should be prompt with submitting your claims to achieve prompt service.
The Cost of Professional Liability Insurance
There are many factors that will determine how much you will need to pay for your professional liability insurance. These factors include:
- The field in which you practice
- The number of historic claims against you
- The size of your business
- The age of your business
- The location of your business
The median cost of professional liability insurance is about $59 per month, which amounts to just over $700 per year. Most policies will cost somewhere between $500 and $1,000 per year — which is a steal considering the protection and support professional liability insurance can provide. If you have other business insurance policies in place, you may be able to reduce the premiums on your professional liability insurance.
To err is human. Even in professional settings, even with high-quality training and diligent attention to detail, people will make mistakes. Fortunately, those mistakes don’t have to cost you your livelihood. With professional liability insurance, you can avoid the high costs of professional errors and continue engaging in business as usual.