Do I Need Professional Liability?
Professional liability insurance serves to cover certain businesses and individuals who offer a specialized or professional service. If you offer a unique service, one that often requires a license or permit, you will typically need professional liability insurance.
Professionals who invest in professional liability insurance often include:
- Medical professionals
- Lawyers
- Accountants
- Financial advisers
- Architects
- Engineers
- Consultants
- Chiropractors
- Advertising professionals
This is not a full list of professionals or those who should consider professional liability insurance, of course. Speak with an insurance agent if you are unsure whether or not you qualify for professional liability insurance.
What Does Professional Liability Insurance Cover?
Professional liability insurance protects professionals and businesses from claims regarding professional negligence. Professional negligence refers to mistakes a professional or specialist makes that causes a client to lose money. For example, say an accountant makes a clerical mistake and causes their client to lose $1 million. The client may sue for their losses, at which point professional liability insurance can step in to cover your business’ related legal costs such as court fees and settlement expenses.
Professional liability insurance is known by different names depending on your location and industry. In the medical field it is known as medical malpractice while other industries may know it as Errors and Omissions insurance (E&O insurance).
Is Professional Liability Insurance Required?
As a rule, professional liability insurance isn’t generally required by state or federal law. However, you may be required to purchase and carry professional liability insurance in order to obtain certain licenses or work in certain professions.
Even without a requirement, professional liability insurance is crucial for protecting you and your practice from an expensive lawsuit.
Who Carries Professional Liability? The Business or the Professional?
Say you are a surgeon working in a large hospital. As a surgeon, you face a lot of professional liability risks concerning surgeries gone wrong and more. So who is responsible for carrying professional liability insurance—you or the hospital?
In essence, both.
Businesses and hospitals should carry professional liability insurance to cover their employees and claims lodged directly against the business. However, professionals can and should also consider carrying professional liability insurance themselves.
This is because a single professional liability insurance policy may not be enough to cover all expenses. For example, say your employer’s professional liability policy covers $1 million per year. This means that it is spread between all claims within a single year. If another professional at your location must file a claim and $900,000 is used, this means you will only have the remaining $100,000 to cover your expenses. This is why most professionals are encouraged to carry their own professional liability insurance for extra security.
It can also help cover you if you are switching jobs and in between jobs, as there is a small gap in coverage between employment that owning your own professional liability insurance can cover.
How Much is Professional Liability Insurance?
The cost of professional liability insurance varies depending on several factors such as your location, profession or industry, size of the business, coverage limits and more.
Speak with an insurance agent about finding an affordable professional liability insurance policy. Choosing a higher deductible can often save you money on monthly premiums, but it also means paying more out of pocket when it comes time to filing a claim.
You can also save money by bundling your professional liability insurance with other policies, such as in a business owners policy. If you are the owner of a small business, a business owners policy can combine certain coverages such as professional liability, general liability and commercial property insurance into a single comprehensive policy.
No matter what industry you are in, it is crucial to speak with an insurance agent about your insurance needs. Every business and professional is different and you will need insurance fit specifically for your needs. If you aren’t sure whether or not you need professional liability insurance, talk to an insurance agent and consider the possible liability issues that could face you, your business or your employees.
Keep in mind that professional liability insurance only covers professional negligence. Basic accidents and non-professional negligence will not be covered under this insurance. Instead, you may also need general liability insurance in case someone is injured or their property is damaged due to your business’ everyday operations.
