Professional Liability Insurance for Small Businesses
Lawsuits happen. Protect your business with professional liability insurance.
You are amazing at what you do. You offer your clients expertise, experience, and the right advice to help them achieve big things in their life or business.
But no matter how good you are, mistakes can happen. It doesn’t matter if it was a significant mistake, a small one, or even if it’s a perceived mistake – the costs can be devastating. With professional liability insurance from InsureGood you can minimize this risk so you can focus on building your dream – not defending it.
What is Professional Liability Insurance?
We’ll help you determine what you need and present you with options to address your risks and budget. Whether you’re starting a business or scaling an established one – we’ve got the right expertise to help you lower your risk and improve your bottom line.
Professional liability insurance also referred to as errors and omissions insurance, (or in the medical field) malpractice insurance protects professional personnel against negligence claims made by their patients or clients.
36 to 53% of small businesses are sued in a given year. If you find yourself in this situation, regardless of whether you made a mistake, you will need to finance the legal costs associated with the lawsuit. Professional liability insurance can help you avoid financial disaster with coverage for the legal defenses and damages should there be any.
Some of the professionals who commonly leverage this type of liability insurance for coverage include:
- Home care and hospice providers
- Management consultants
- Financial services professionals
- Project managers
- Marketing professionals
- Life/career coaches
- Real estate brokers
Does My Business Need Professional Liability Insurance?
If you are offering advice or providing services to your clients, you likely need professional liability insurance.
The need for professional liability coverage developed because typical general liability insurance policies only respond to bodily injury, property damage, personal injury, or an advertising injury claim. Professionals such as home care aides, management consultants, accountants, financial services professionals, technology consultants, and others can experience claims that don’t fall under general liability; as a result, additional coverage is needed to fill this gap.
Common claims made on these policies include negligence, misrepresentation, violation of good faith and fair dealing, and inaccurate advice. For example, if a technology consultant fails to install the software correctly, it would not cause bodily injury, property damage, or advertising injuries. Therefore, general liability insurance would not cover the claim. The incorrectly performing software could directly cause financial losses and may be attributed to a misrepresentation of the technology consultant’s capabilities, the professional liability coverage would be triggered.
When deciding if your business needs professional liability insurance, keep in mind that when a small business lawsuit goes to trial, it can cost anywhere from $3,000 to $150,000 to resolve. Without professional liability insurance, you would need to maintain enough cash in your operating account to cover these costs out of pocket. In addition, the risks of lawsuits grow as your business, the number of employees and the number of clients rise – requiring you to continue to increase the money you have in reserve to cover the potential costs.
You may also be required to have professional liability in place to land larger projects – particularly government or municipal contracts. These types of projects often require proof (called a certificate of insurance) of your professional liability insurance before they allow you to begin your engagement with them. We make this easy at InsureGood. Once your professional liability insurance is in place, you’ll have access to your certificate of insurance anytime in our client portal.
Regardless of whether it’s required, we strongly recommend that you secure professional liability insurance to protect you and your business from potentially catastrophic lawsuits that may prevent your business from reaching its full potential.
Professional Liability Insurance Frequently Asked Questions
How much does professional liability insurance cost?
The average cost of professional liability insurance in America is $750 annually. However, the cost for your individual professional liability insurance is determined by several different factors including:
- Your industry – in general, higher risk industries tend to have higher premiums to the risk
- Coverage limits – the higher the amounts of insurance you buy the more premium will be
- The size of your business – the larger your organization and your team’s size the larger your potential for a loss which increases the premium
- Experience – as the amount of time you’ve been in business and your experience increases successfully, your premiums will likely decrease
- Location – where you’re located can increase your premiums if there are higher loss rates in your area
Learn more about the cost of professional liability here.
Is professional liability the same as malpractice insurance?
Malpractice insurance is a specialized type of professional liability insurance for legal and medical professionals and addresses the unique liability risks they face. All professional liability insurance policies help you cover the costs associated with making a mistake (or a perceived mistake) as you provide professional services. If a client sues you over a perceived mistake, professional liability will help you pay for legal defenses as well as damages if found liable.
Is professional liability the same as errors and omissions?
Errors and omissions insurance and professional liability both protect you from the financial burden of lawsuits caused by unsatisfactory work. Depending on the industry you’re in, professional liability may be referred to as errors and omissions.
What’s the difference between professional liability and general liability?
Professional liability covers risks associated with the rendering (or failure to render) of professional services such as errors, omissions, and failure to uphold promises. General liability covers risks associated with bodily injury, property damage, and advertising injuries such as slander. When combined, the two policies provide broad coverage that protects you from many of the common risks a small business faces.
How do I purchase professional liability insurance?
Professional liability can be purchased as a single policy or as part of a commercial package policy where you bundle together most of your insurance coverages. To purchase a professional liability policy you will need to complete a short application that provides the details of your business. Working with InsureGood, you will then determine the appropriate levels of coverage and specific coverages you may need to adequately cover your business. For straightforward risks, the entire process shouldn’t take more than 30 minutes of your time in total to obtain a professional liability policy.
Additional Professional Liability Insurance Resources
Does your company need both general liability and professional liability coverages? Here’s your guide to understanding the difference between the two and the coverage that you might need. .
How much does professional liability cost? This article can help you understand what you may pay and why.
Your consulting company faces many risks. Learn what they are so you can effectively manage, lower, and insure against them, preventing a catastrophic loss for your business.