What is Professional Liability Insurance?
According to the U.S. Small Business Administration, there are around 2.5 million small businesses in Florida, and these small businesses make up 99.8% of all companies within the state. Many of these companies are in the business of offering specialized services or professional advice to their customers. But what happens when you or your employee make a mistake? And that mistake results in an unhappy client who wants to recover their losses through a lawsuit?
This is the scenario that a Professional Liability insurance policy was designed to help with.
A Professional Liability (or otherwise known as an Errors & Omissions) insurance policy is an essential policy that protects you and your company in case of a lawsuit due to alleged professional wrongdoing.
No matter how experienced you are and how good you are at what you do, mistakes happen. Unfortunately, one error can bring your whole operation to a screeching halt.
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
Professional Liability covers all costs to defend your business in case of a lawsuit from a covered claim.
The following is covered by the policy:
- Attorney Fees
- Administrative legal fees
- Any settlement awarded against you (up to policy’s limit)
- Defense coverage whether you are found guilty or the lawsuit is thrown out of court
- Worldwide coverage as long as the claim is filed in the United States or its’ territories
- Claim hotline to report the claim and get an immediate response
- Often flexible payment options are offered
- Expert claim adjusters who help you navigate the intricacies of the situation
The following is NOT covered:
- Illegal acts
- Intentional wrongdoing
- Known claims and circumstances
- Employee injuries and disputes
- Property damage
- General liability claims
Who needs Professional Liability Insurance?
- Do you offer professional advice to your clients that they rely on to make decisions?
- Do you offer specialized service?
- Do you have staff members that offer such advice or service on your company’s behalf?
If you answered “yes” to any of these questions, then Professional Liability insurance was designed for businesses just like yours. At its core, the Professional Liability policy was designed to protect businesses that give advice, design solutions of some kind for their clients or offer services.
Professions that neEd Professional Liability Insurance are:
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How much does Professional Liability Insurance cost
A professional Liability policy is a very specialized insurance product, tailored individually to each business. An average cost of a Professional Liability policy for businesses in Florida is around $775.
The cost of the policy depends on many factors, and because it is tailored specifically to your business, It is hard to predict the actual cost of your policy. The following factors could affect your Professional Liability Insurance premium:
- The type of your occupation – some professions are inherently riskier than others from an insurance standpoint. The riskier the occupation, the higher the cost.
- The amount of insurance limits you require
- The deductible amount you are responsible for in case of a claim
- The size of your company – employees: the more employees you have the higher the risk that someone will make a mistake on your behalf and thus a higher chance of being sued.
- The size of your company – sales: The bigger sales turnover you have the larger, more extensive projects you are likely taking on