What Does Professional Liability Insurance Cover?

The following coverages are typically included in professional liability insurance:

• Mistakes, negligence, or alleged negligence – services provided or not provided by your company that result in client damages

• Defense costs – Legal defense costs associated with lawsuits against your company (regardless of fault)

• Personal injury – claims of liable or slander, whether they’re true or not

• Copyright infringement – Copywrite law issues, mistakes, oversights, and misunderstandings

• Previously performed services – protection for current and previous work completed (for an agreed-upon timeframe).

• Temporary staff and independent contractors – work performed by your employees, including temporary staff and independent contractors

The following are typically not included in professional liability coverage:

• Bodily injuries to others

• Cost of damaged property

• Medical expenses associated with bodily injuries to others

General liability insurance can be added to your insurance program to address the above risks and minimize gaps in coverage.

What Types and How Much Professional Liability Coverage Does My Business Need?

The amount and specific types of professional liability insurance coverages that you may need will depend on the size and complexity of your business. Its challenging to say for sure what you need without knowing more about your business. To ensure you’re adequately covered, we advise that you work with a licensed, independent insurance agent such as InsureGood.

These general considerations will help you understand some of the elements you may want to consider:

• • Are there any tasks, activities, or services that you normally perform that the policy doesn’t cover? Look at the list of exclusions and review it to ensure it does not preclude coverage for any professional services or tasks you need coverage for. InsureGood can help you determine if all your professional tasks would be covered or if additional clauses would need to be added.

• • Is there an extended reporting period option? This would offer additional time to report claims that would typically fall outside the policy period—as long as the act driving the claim occurred during the policy period. Find out what extended reporting period options are available if needed.

• • Can the policy be customized or modified? Can extensions be added? Typical additional coverage includes disciplinary proceedings or reduced retentions and may be of importance to your business.

• • Have there been any past issues or activities at your business that could potentially result in a claim? Have there been past claims? What was the result? Discussing these specifics with an Agent can help determine what coverage specifications you need now to prepare you for the future.

• • Are there specific insurance limits that clients require you to have? For example, many clients will want to see proof you have $1,000,000 of professional liability insurance.

Is Professional Liability Policy Required by Law?

How do I Lower My Professional Liability Premiums

(and the Risk of My Business Being Sued)?

Some professional liability claims are unavoidable, but there are things that you can do to lower the likelihood of a lawsuit or being found liable if you are sued. By putting the right operational processes and policies in place, you can avoid high out-of-pocket costs and lower your insurance premiums.
Here are some suggestions:

• Always have a signed and dated contract in place before beginning your work with a client, be sure to have a defined scope of work, and obtain approval for each phase of your engagement

• Meet deadlines and communicate with clients regularly

• Establish a documented, high standard for product and service quality control at your organization

• Keep all company records up-to-date and accurate

• Train employees thoroughly and properly

You don’t have to complete all of this on your own. Our InsureGood Business Risk Advisors can work with you to design and implement a risk management program to help you reduce your professional liability risks and lower your premiums, all while increasing your client’s satisfaction.

Your Professional Liability is Likely Tax-Deductible

Good news! If you’re operating a for-profit business, business expenses, including professional liability insurance, can be deducted from your taxes as long as they are both ordinary and necessary. If the insurance policies are common and necessary for your business, you can write off the total amount.

There are Cash-flow Friendly Ways To Pay For Your Professional Liability Policy

Depending on your business and cash-flow needs, you can leverage one of several options to pay your professional liability insurance premiums. Working with InsureGood, you can set up monthly, quarterly, or full-year payments to be paid through your company credit card or even finance your premium if it’s above certain thresholds.