What is Professional Liability Insurance?
According to Business News Daily, there are more than 4 million small businesses in California and these small businesses make up 99.8% of all businesses within the state. Small businesses that provide professional services or give advice to clients should consider purchasing Professional Liability insurance in California. Professional Liability insurance is commonly known as errors and omissions (E&O) insurance. It protects your business against claims of negligence, misrepresentation or mistake. Typically, the allegation is that your services, products or employees caused some form of financial damage to your clients.
Take for example you offered a professional service that did not suit your customer. They suffered personal and financial damages after using your offering. As a result, the customer initiates a lawsuit against your company. In such a situation, a professional liability insurance policy can help you meet expenses incurred while defending your company.
What does Professional Liability Insurance cover
The following aspects are covered under Professional Liability Insurance California:
- Actual or alleged negligence: The policy protects your business against both actual and alleged claims of errors and omissions that may have occurred while providing professional services.
- Legal expenses: All legal expenses incurred while defending your company such as lawyers’ fees, documentation and underwriting charges, and administrative costs are covered by Professional Liability Insurance.
Who needs Professional Liability Insurance?
Professionals and businesses that provide professional services such as giving advice, making educated recommendations, designing solutions or representing the needs of others all have Professional Liability exposure. Professional Liability Insurance can safeguard your professional reputation, profitability, and business assets from the potentially astronomical expenses of litigation (whether justified or not).
Professions that need professional liability insurance are:
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How much does Professional Liability Insurance cost in California
On average, the yearly cost of Professional Liability insurance for small businesses in California is around $773.
The cost of Professional Liability insurance is heavily influenced by the types of occupation it provides cover for. Generally the riskier the occupation, the higher the cost.
Other key factors that play a part in determining the cost are:
- Your business turnover and size
- The amount of insurance cover you require
- The individuals being covered – are they qualified for the job they are performing, and do they have a previous history of claims?
- Your individual claims history