Why Do I Need Professional Liability Insurance?
Apr 25, 2021
Do I Need Professional Liability Insurance?
As a professional, you are expected to provide services with a high level of service and diligence. At the same time, you're only human and are bound to make mistakes! Unfortunately, if you unintentionally make a mistake on the job, your client can sue you for potential financial and reputational harm. What do you do then? This is where Professional Liability Insurance comes into play. In this blog, we will explain why it is important to have a Professional Liability Insurance policy for your business.
Why is it important to have Professional Liability Insurance?
Mistakes can happen anytime on the job. For example, as an accountant, while providing your services to a client, you accidentally make a calculation error which leads the client to believe in false numbers and to take actions they wouldn't have taken knowing the real numbers. Another example could be a consulting service where you help your clients make recommendations. You accidentally miss a deadline for delivering your work which harms the client’s reputation since they are not able to make the right recommendations. Let's say you're an engineer and underestimated the budget for a project for a client; now the client has to pay the extra budget from their own pocket.
In all these cases - whether it may be a case of negligence, budget overruns, mistakes on the job, incomplete work or undelivered service, breach of contract or missed deadlines - a Professional Liability Insurance policy would protect these professionals and their business assets.
A Professional Liability Insurance policy will cover all costs related to the lawsuit: Legal expenses and defense costs if the claim goes to court, compensation related to payments required to be made to injured stakeholders and all other settlement costs if the settlement is made outside the court.
It won’t cover claims made outside the retroactive period of the policy, property damage, fraudulent acts, theft of patents or trade secrets, false advertising or claims related to employment. For more details, check out our blog on Professional Liability Insurance exclusions.
Learn about, "How Long Does It Take to Get a Professional Liability Quote?"
If you are a professional and provide specialized services, it is prudent and wise to have a Professional Liability policy in place. Ask yourself if you can guarantee that you 100% will never make a mistake or have to miss a deadline; even if you can guarantee it 95% of the time, that 5% can put you out of business if you don't have the right insurance in place to help cover the cost of legal fees and damages. The cost of a Professional Liability policy often depends on the size of your business operations, revenues generated, years of experience, education and training and previous claims history. That being said, it is typically an affordable price to pay to prevent an even greater financial loss. Our team of experts at Foxquilt can help you with a tailored quote according to the unique, individual needs of your business. Get started on your online quote today.
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