Did you know accountants need insurance to give you financial advice? This special type of coverage is called Professional Liability Insurance, and it has a wide range of users and uses. In this blog we’ll cover why this coverage is so important, what it covers, and who can use it!
Why Professional Liability Insurance?
If you are an expert in a field of service, that’s awesome! Though mistakes will be less likely, they still happen. We are only human. The mistake made often will affect you personally, but what if it affects someone else? For example, you are an engineer hosting a group of visitors. One visitor accidentally does damage to a piece of equipment that is not owned by your company. Traditional BOP policies might not cover this, but you can usually bundle professional liability into your business policy that will help cover it.
What Does Professional Liability Insurance Cover?
When a claim is made against a professional service provider, whether it is allegedly negligent or a simple mistake, professional liability insurance will cover it. The policy will usually help with defense costs and damages up to a certain limit depending on your plan.
Professional Liability Insurance policies work on a claims-made basis. This means the coverage is valid as long as the claim was filed during the policy period. You can add a retroactive date to cover incidents that happened before the coverage began. They also cover work performed anywhere in the world.
Make sure you understand the difference between general liability and professional liability. General liability covers property damage and personal injury, while professional liability covers financial losses due to mistakes or court fines. One lawsuit can bury a small business. The key is to be able to recover from such losses and move on.
Who Needs this type of insurance?
Beyond wanting this type of insurance, some service providers actually need it to operate. A number of states require you to have it before you even open your doors. Your clients might also request it as a part of your business contract.
Here are a few professionals that Professional Liability has come in handy for:
- Attorneys – Also called Legal Malpractice Insurance, can protect against claims of negligence filed by a client that didn’t like the outcome of a case.
- Architects – Covers defense costs against claims of bad advice in planning or unsafe practices.
- Insurance Agents – This one hits close to home! We often have coverage called Errors and Omissions Insurance, which is basically the same thing. It protects us in case an agent creates a policy and forgets to add coverage or is allegedly negligent in rendering services.
- Home Inspectors – Similar to the one above, professional liability helps in case a home inspector failed to note something on an inspection report and the new homeowner claims negligence against the inspector for not noting it.
These are just a handful of professionals and examples Professional Liability is used for. Any business that gives advice or sells a professional service should heavily consider having it.
Bottom Line:
You might hear the phrase, “nowadays, you just have to be careful not to get sued.” While this is a negative sentiment, it’s not totally wrong. Lawsuits pop up all the time due to some of the silliest reasons, but if not taken seriously, they can really cost you.
The Greg Fay Insurance Agency understands the importance of protecting your business risks and liabilities. No matter if you’re starting out on a new venture or watching a previous one grow, we can help protect it by preparing a business insurance package that makes sense. Contact our office today!
