Professional liability insurance can help protect your business if the work or advice you provide results in client losses and subsequent professional negligence lawsuits. This type of policy may apply to professional mistakes ranging from incorrect advice, breach of duty, incomplete work, missed deadlines, misrepresentation and even wrongful acts. Read on to learn more about this coverage and who needs it.
Professional Liability Insurance Explained
Professional liability insurance has many names, based on your location and industry. In the United States, this insurance is commonly known as errors & omissions (E&O) coverage. In the medical field, it’s known as medical malpractice insurance. In any case, professional liability insurance is a key form of coverage for any business that provides expert advice or services to their clients. This coverage is more prevalent within certain industries.
Professionals that are likely to need professional liability insurance include the following:
· Insurance professionals
· Medical professionals
· Real estate professionals
When Is Professional Liability Insurance Required?
Both businesses and individuals may carry professional liability insurance, although it isn’t always required. While professional liability insurance isn’t typically required by any state or federal law, you may be required to carry this insurance in order to obtain certain license or work on projects. If you are a contractor, for example, an entity that hires you for a job may require you to carry professional liability insurance. This protects them in case you do not finish the job or make a mistake that costs them money. Professional liability insurance also protects you from expenses related to a lawsuit—such as defense costs, settlement expenses and court fees, among others.
The Cost of Coverage
The cost of professional liability insurance varies depending on several different factors—including your location, profession or industry, coverage limits, claims history and credit score. If you or your business has a history of claims regarding liability, you could pay more for professional liability insurance.
Be sure to speak with an insurance agent if you have any questions about professional liability coverage and whether you or your business needs it.