What is Professional Liability Insurance?
There are over 700,000 small businesses in Massachusetts, according to 2020 data from the U.S. Small Business Administration. These small businesses make up 99.5% of all businesses in the state and employ 1.5 million people.
Many of these businesses offer their clients and customers specialized services or professional advice. However, this opens their business up to a unique set of risks. Something as simple as an innocent mistake could result in a lawsuit if an unhappy client seeks financial compensation.
Professional Liability insurance in Massachusetts is designed to help in these types of cases.
A Professional Liability insurance policy (otherwise known as Errors & Omissions Insurance) is an essential policy that protects you and your company in case of a lawsuit due to alleged professional wrongdoing.
Mistakes can happen to anyone, even the most experienced professionals. Unfortunately, even a minor error or innocent omission can cause huge problems for your clients and your business.
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 in Massachusetts covers the costs of defending your business in the event of a lawsuit brought by a customer.
For example, you offer a professional service to a client. This service does not suit the client’s needs, and they suffer a financial loss as a result. The client can sue you to reclaim their loss. In this case, Professional Liability insurance can help cover the costs of the lawsuit and any settlement or judgement that results from it.
The following is generally covered by a Professional Liability policy:
- Attorney Fees
- Administrative court or legal fees
- Settlements or judgements
- Defense coverage (whether the lawsuit proceeds or is thrown out of court)
Who needs Professional Liability Insurance?
When deciding if you need Professional Liability insurance, it may help to ask yourself a few questions:
- Do you offer a specialized professional service?
- Do you offer educated advice that your clients rely on to make decisions?
- Do you represent your clients’ needs on their behalf?
- Do you have staff members that do any of the above on behalf of your company?
If you answered “yes” to any of these questions, then you may need Professional Liability insurance. Professional Liability policies are designed to protect businesses that offer specialized services, give professional advice or recommendations, and design solutions for their clients.
There are many professions that need Professional Liability Insurance, including:
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How much does Professional Liability Insurance cost in Massachusetts?
A Professional Liability policy is a specialized insurance product, tailored to meet the needs of each business or individual. This means that the cost of a policy varies widely.
Many factors are used to determine the cost of a Professional Liability insurance policy. The following factors could affect your Professional Liability Insurance premium:
Your occupation – Some professions carry more risk than others from an insurance standpoint, which generally mean higher premiums.
Your size of your business – The more employees you have, the higher the risk that someone will make a mistake.
The scope of your business – More sales and larger projects can also increase the risk that mistakes will be made.
The amount of insurance you need – More insurance cover typically means you’ll pay higher premiums.