Professional liability insurance is the one form of business insurance that most professional service providers agree is non-negotiable. While they may waver over whether or not to get insurance for their business property, autos, or even for their personal lives, most professional service providers agree that professional liability insurance is a necessary cost of doing business. While many ask why this is so, others know the value of it, especially if they have been in litigious situations in the past. The unfortunate reality is that our society is becoming more litigious by the day as opposed to less so.
For those who work within a professional capacity such as a real estate agent or even an IT consultant, the chances of being sued for negligence, or even perceived negligence, are higher than ever before. While many people will trust that such an individual has done their job to the best of their ability, others may be upset if the professional could not get them the desired result. For example, if a real estate agent were to lose a sale for a client to another buyer, the client would be understandably upset and might even refuse to pay the agent’s fees. This is obviously untoward, since the agent has still done his or her job.
The client in this case could then take the real estate agent to court for misconduct, claiming that they had not done everything in their professional capacity to serve their clients’ best interests. This is where professional liability insurance comes in. The real estate agent would not have to pay their own legal fees and risk the possibility of bankruptcy. Instead, their insurance would cover the legal expenses and any resulting settlements.
Professional liability insurance is more than just a contract requirement or nuisance expense. It is a safety net that professionals may call upon unexpectedly; a financial backstop in case something goes wrong. While paying an insurance premium every month may be irritating and even feel unnecessary, experienced service professionals will tell you that sooner or later, this investment could produce your greatest returns.