Professional Liability Insurance
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According to the U.S. Small Business Administration Office of Advocacy 2022, Washington has more than 657,529 small business. Small companies are an integral part of Washington’s economy, accounting for 99.5 percent of businesses and adding more than 276,978 new jobs to the state.
Five of the top industries in Washington State that are a good fit for small businesses include:
- Accommodation and Food Services
- Health Care and Social Assistance
- Professional, Scientific, and Technical Services
You’ll want to guard your business from the most common risks regardless of the field you work in. One way to accomplish this is to purchase Professional Liability insurance. A policy can help protect the various businesses and occupations from common claims that might otherwise end up financially damaging for your business.
What is Professional Liability insurance?
Washington’s Professional Liability insurance is a suitable alternative for small businesses who offer professional services to clients or advise them.
Professional Liability insurance protects you from claims raised due to unintentional mistakes made in the professional capacity. The insurance shields your business from accusations of negligence, mistake or misrepresentation. Typically, the allegation is that your service, products, or employees have caused financial damage to your clients.
As an example, suppose you provided a professional service which did not please your client. They suffered personal and financial damage as a result of using your service which, in turn they bring a suit against your company. In this situation the Professional Liability insurance policy could aid you in paying for the expenses that arise while protecting your business.
What does Professional Liability insurance cover in Washington?
Professional Liability insurance in Washington protects you against allegations of:
- Error or mistake
- Deadlines are not met
- Services that cannot be delivered
- Breach of contract
If a lawsuit or claim is filed against your company in connection with any of the above the above, your Professional Liability insurance policy will pay your legal expenses incurred when defending your company. The policy will cover lawyer’s costs, underwriting and documentation charges, as well as administrative costs, settlements and judgments.
Professional Liability insurance protects you from many kinds of losses, both actual and alleged, caused by your work. Even if a lawsuit is not based on merit, it could still be expensive. A Professional Liability insurance policy protects your business from legal expenses. Without it, you’d be responsible for these expenses which could cause bankruptcy or closing. In the event of a disaster, you could also need to draw on your savings to cover legal costs.
What is not covered by a policy?
Many small businesses get Professional Liability insurance. However, it does not guarantee all the risks your company could be exposed to. To fully protect your business, you might consider additional types of insurance.
The above and other types of coverage are available to small business owners in Washington.
- General Liability This insurance protects your company from lawsuits that could result in physical injury or property damage.
- Business Owner’s Policy (BOP) This is a combination insurance that combines General Liability as well as Business Personal Property coverage to protect small businesses against costly interruptions to services.
- Workers’ Compensation – Workers’ Compensation insurance (also known as Workers’ Comp or Workman’s Comp) protects you against medical expenses and lawsuits caused by employee workplace injuries and illnesses. The insurance could pay for the loss of wages in case employees are injured on the job.
Who may need Professional Liability insurance?
In Washington, Professional Liability insurance can be advantageous to many types of businesses and professionals. They include businesses that are engaged in providing advice based on the expertise of specialists, making educated recommendations, designing solutions, or expressing the needs of others on their behalf.
Professional Liability insurance shields your business’s assets, profits and reputation from huge cost of litigation (whether they are justified or not).
The following professions may require Professional Liability insurance:
|Home Care Providers and Businesses||Yoga Instructors|
As you can see, the kinds of jobs that require Professional Liability insurance vary. It is worth considering the nature of your work to determine if this type of insurance is right for your company and.
Business owners or individuals who are involved in these activities should consider having Professional Liability coverage:
- Regularly provide advice or recommendations to clients
- Create solutions or products that are unique for customers and their customers
- Represent the client’s interest on their behalf
- Other professional services offered to clients and customers
- Employers that can perform all of the above are welcome.
Do Washington businesses need Professional Liability insurance?
Professional associations may require members to carry Professional Liability insurance. It may be essential to maintain minimum coverage levels in order to renew your license or work within the industry. Your professional association’s website should provide information about their insurance requirements in case they have any.
Clients could also request that you have Professional Liability insurance prior to when they can work with you. You can find this requirement in contracts for business and may also require proof of insurance before you begin work with the client.
It could be recommended to purchase Professional Liability insurance even if it’s not required. Customers may expect the businesses or the professionals they employ to carry insurance. Your policy demonstrates your professionalism to customers and also that you’re ready to protect your name if needed.
What is the cost for Professional Liability insurance in Washington?
The cost of Professional Liability insurance can vary widely. In The Evergreen State although the annual average price of Professional Liability policy is $678, prices are heavily influenced by the kind of profession it covers.
Other important elements that are crucial in determining the cost of Professional Liability insurance include:
- The volume and size of your business – Larger contracts generally mean greater risk.
- The quantity of insurance you need – The more coverage you require, the more you can be prepared to pay.
- The individuals being covered – Are they competent for the job they’re assigned to do, and do they have an earlier history of claims?
- Your personal claims history The history of similar claims in the past can make it more expensive to pay for the insurance.
Is Professional Liability the same as E&O insurance?
Professional Liability insurance and Errors and Omissions (E&O) insurance offer the same insurance coverage. It can protect your business from claims arising out of negligence, fraud, and mistakes. It will pay for the costs of defense as well as settlements or damages resulting from an action.
Recommended reading: E&O insurance vs Professional Liability insurance
How to obtain Professional Liability insurance in Washington?
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