How Will Your Texas Business Benefit from Professional Liability Insurance?
According to the U.S. Small Business Administration (SBA) Office of Advocacy, there are 2.7 Million small businesses in Texas which equates to 99.8% of all businesses within the Lone Star State. One hundred percent of the Texas firms that provide professional advice or perform specialized services should consider adding Professional Liability Insurance to their portfolio. This is because Professional Liability Coverage, also known as Errors & Omissions (E&O) insurance, protects businesses against allegations of mistakes, negligence, or misrepresentation.
The most common accusation against a business is that an employee, service, or product somehow caused harm to a customer, typically financial harm. Your client may even take things a step further and initiate a liability lawsuit against your company as a way of mitigating their losses. If so, your Professional Liability Insurance will help absorb the unexpected costs related to defending your organization.
What does Professional Liability Insurance Cover?
Professional Liability Insurance provides a variety of benefits for a spectrum of liability circumstances.
Depending on the type of coverage limits selected, your Professional Liability insurance policy will provide financial resources for the following items:
- Defense attorney fees
- Expert witness and private investigator costs
- Court administrative costs
- Settlements (money paid to your client to drop the lawsuit)
- Judgements (money the judge or jury orders you to pay to the client)
- Documentation charges
- Miscellaneous administrative costs
Relying on your Texas Professional Liability Insurance means you can avoid using business revenue to defend your company against a liability lawsuit. Your business operations can continue to run smoothly without interruption.
Below are a few basic scenarios for which your Professional Liability Insurance plan will help your Texas business.
- If the client claims your business delivered incomplete or insufficient work
- If the client claims you or your employees provided inaccurate or illegal information or advice
- If your client claims your business breached the service contract in some manner
Of course, there are exclusions within every Texas Professional Liability Insurance policy including the following conditions that are not covered:
- Illegal acts
- Intentional malpractice
- Property damage
- Known claims and circumstances
- Fraud and dishonesty
- Bodily injuries
- Deliberate wrongful acts
- Employment discrimination
- False advertising
- Violation of laws or regulations
Professional Liability will safeguard your company whether the alleged wrongdoing is factual or completely false. This is important because even a baseless claim requires payment of court fees and legal costs that can add-up to thousands of dollars.
For small business owners like yourself, the peace of mind Professional Liability insurance coverage provides is priceless.
Who needs Professional Liability Insurance?
Many different Texas professionals can benefit from the support of a Professional Liability policy to guard their financial resources and protect their reputations from the hazards of a liability claim.
In fact, Texas business owners in a wide variety of industries secure Professional Liability coverage because they offer unique advice and services that make them vulnerable to someday being the defendant in a liability lawsuit. Notary publics, home care providers, consultants, engineers, and dozens of other Texas business owners keep Professional Liability coverage in their toolkit just in case they are ever involved in a liability case.
Professional Liability Insurance helps C-suite executives safeguard their business assets, business reputations, and long-term profitability from the expense of potential litigation.
How Much Does Professional Liability Insurance Cost?
Professional Liability Insurance premiums are unique to each company and are calculated based on several different factors. On average, Texas businesses pay an annual premium of $894 for Professional Liability coverage.
Typically, the riskier the profession then the higher the Professional Liability Insurance pricing will be. However, there are other important aspects of an organization that must be considered when calculating the final premium amount.
A few of the key components taken into consideration when establishing a Professional Liability policy are:
- Annual payroll, staff size, turnover rate, employee licensing and experience
- Type of occupation: some professions are simply riskier than others and the insurance costs reflect that difference.
- Credit and legal history
- Previous claims history
- Annual revenue: Complicated, big-budget projects will increase your risk of being sued and, therefore, the insurance carrier will appraise this when determining your pricing.
- The liability limits selected. Bottom line: the higher the limit purchased ($2M versus $1M) then the more you’ll pay in premium.
What Other Ways Can Professional Liability Insurance Benefit My Business?
Professional Liability Insurance will also offer your Texas business less obvious benefits such as:
- Professional Liability May Be Required – For example, many industries such as fitness or health care require professionals to buy a Professional Liability policy before working with the public. Often state, federal, and/or professional regulations enforce this type of requirement.
- Certificates of Insurance (COI) – A COI for Professional Liability Insurance is often requested by business partners, loan officers, landlords, and other business contacts. Not having Professional Liability insurance already in place means you could miss out on a great opportunity.
- Possible Tax Benefits – Verify with your company’s accountant or CFO to confirm if there are any possible tax benefits to having a Professional Liability Insurance policy. For example, you may find that all or even a portion of the E&O premium is a deductible business expense.
Texas Professional Liability Insurance Makes Sense
As a specialist in your field, you will require unique coverage that is designed to confront specific challenges and secure your company’s long-term success. Professional Liability Insurance provides multiple benefits to your business and can do so for a minimal price.
Up until this point, you may have been fortunate in not encountering a dissatisfied client willing to pursue legal action. However, as your customer base expands and you take on even bigger projects, you may find yourself and your company in a compromised situation for which Texas Professional Liability coverage would be beneficial.