What Professional Liability Insurance Is All About:
If your business provides customers or clients with professional advice, products or services that results in them suffering a financial loss, you may be liable. If you are deemed liable, this insurance will protect you from the costs associated with, for example, a negligence claim made by a customer or client. Professional Liability Insurance provides you with extra protection in the event that someone is unhappy with the results of your advice or services.
Without this insurance, your business may not only be subject to financial risk but also other risks. You may store sensitive data which, if compromised, can upset those who use your services hoping they will remain secure. Given the many ways in which people can become dissatisfied with advice or services, investing in extra protection can help you rest easy knowing a remedy is available.
Read on to see if Professional Liability Insurance is right for your business.
What Is Professional Liability Insurance Coverage?
Professional Liability Insurance is coverage is for different types of unwanted outcomes that can arise as a result of a business providing professional advice or services to a client or customer. If a client or customer determines that advice, products or services have proven less than satisfactory, they may seek a form of remittance. Remittance can mean that an individual or group will file a claim against your business, seeking to recover costs alongside other forms of loss.
Depending on the industry your business operates within, the types of Professional Liability protections you need will vary. For example, different products often need to be recalled due to them not working, having been contaminated or having the ability to cause bodily injury to human beings. Whenever any of these unwanted outcomes occur, a business owner will want to ensure they can find a suitable course of action.
Do I Need Professional Liability Insurance?
If you have considered some of the potential liabilities you may suffer in the event that your professional advice, services or products are not satisfactory, you likely have a good understanding of the risks for your business. General Liability policies protect your business. However, they do not protect your professional reputation. Investing in this insurance means that if anything goes wrong, you have a course of action available to bounce back. The existence of risk is inherent in owning a business and managing it is an important decision.
This insurance will come in handy if you:
- Want to protect yourself and your business against negligence claims
- Want to protect yourself and your business against financial risk
- Want to ensure your business assets are protected for now and for the future
- Want coverage for anything that can go wrong with providing professional advice, services or products to customers or clients
Still not sure what you need?
CoverWallet's Insurance Checklist , you'll find a list of insurance types needed for your specific business or industry.
What Does Professional Liability Insurance Cover?
At a High Level:
Professional Liability Insurance can provide your business with protection in the event that anything goes wrong with the professional advice, products or services you provide to customers or clients. In doing so, you can rest easy knowing that you have protected yourself and your business against unwanted outcomes.
Getting Into the Details:
While every Professional Liability policy is different and varies depending on the professional advice, products or services you provide to customers or clients, each includes extra protection to help you rest easy. There are several types of Professional Liability protections you can choose depending on the type of coverage you need such as:
|Type of Coverage||Description||Example|
|Architect & Engineer Liability||Protection for architecture and engineering firms against any claims of negligence, omission or error on behalf of the business.||If an engineer makes a mistake which costs a client money, the firm will be protected against the costs associated with that loss.|
|Data Compromise Liability||Protection for businesses which hold sensitive data against any claims of negligence, omission or error in security.||If a business offering secure storage for data has data compromised, they will be protected against financial risk and other liabilities.|
|Banking & Broker Liability||Protection for banking institutions and brokers against any claims of negligence, omission or error on behalf of the business.||If an banker makes a mistake which costs a client money, the institution will be protected against the costs associated with that loss.|
|Technology Liability||Protection for those working in the technology industry against any claims of negligence, omission or error on behalf of the business.||If a web developer makes a mistake which costs a client money, the agency will be protected against the costs associated with that loss.|
|Media & Communications Liability||Protection for those working in the media and communications industry against any claims of negligence, omission or error on behalf of the business.||If a social media coordinator makes a mistake which costs a client money, the agency will be protected against the costs associated with that loss.|
You’ll Know It’s the Right Insurance If You...
- Are a business owner and want to protect yourself and your business against unwanted outcomes
- Want to ensure that you have a course of action in the event a customer or client is unhappy with the professional advice, products or services you have provided them with
- Understand that owning a business involves risk and want to manage it
- Have a General Liability policy that provides only basic coverage and want additional protection for the diverse risks associated with Professional Liability
- Understand that life can be unpredictable and want protection against unwanted outcomes
- Want to protect the financial future of your business
What Does Professional Liability Insurance Not Cover?
- If your policy covers an amount less than the total value of the financial losses associated with a claim made by a client or customer, the remaining amount will not be covered
What Are the "Limits" on Professional Liability Insurance?
A Professional Liability policy covers specific types of protections in addition to what your General Liability policy covers. Each of these protections will have coverage upwards of a given amount. If your policy provides coverage upwards of $1 million, then this will be the limit. As the types of coverage needed for Professional Liability vary greatly, each will have a different amount. If you choose a policy that does not cover the full value, then you will be protected upwards of a given amount.
How Much Does Professional Liability Insurance Coverage Cost?
The costs associated with Professional Liability Insurance vary in accordance with the specific policy you have chosen. Each policy is created based on the professional advice, products or services your company provides. While any professional can invest in Professional Liability for their business, the needs of each industry will vary accordingly. The coverage needed for those providing professional advice in one industry will differ from those in the next. Similarly, the coverage needed for products in one industry will differ from the coverage needed for services in another.
Overall, the cost will be contingent upon the type of the insurance policy you choose and how much protection it affords. You may choose a policy that includes one, several or all of the aforementioned protections, each of which have their own costs. Regardless of the protections, you invest in; you will likely find yourself paying a small percentage of that amount in the form of a premium.