Professional Liability Insurance

If your business provides professional services or advice to clients then you’ll need to purchase some form of Professional Liability insurance to fully cover yourself from mistakes. Because regardless of how careful you are, mistakes can happen. And if they do, you’ll want to have insurance coverage in place to insure your business from having to pay for the resulting financial damages. Professional Liability can also cover the costs associated with any litigation filed against you by clients. These costs can include court expenses, legal fees, and any unfavorable judgments.  Given the many different types of business insurance policies available, it’s sometimes difficult to determine which types of insurance you should consider purchasing. The answer depends on what type of business you have and what types of services you provide.

The following information addresses some of the more common Professional Liability insurance questions:

• Many business owners confuse General Liability insurance with Professional Liability insurance. But the difference in the policies is important.  General Liability typically only protects against physical damage to either a person or property. So if a person is hurt while visiting your business, General Liability would pay for those injuries or for any litigation resulting from the incident.  Professional Liability, on the other hand, protects against financial damages that your business causes as a result of the services provided. So say, for example, your insurance company fails to issue a policy in a timely manner and the client then has a claim. Professional Liability insurance would protect your business from litigation or would pay the fees resulting from the oversight. In some instances, both a General Liability policy and a Professional Liability policy are necessary to fully protect your business
• Professional Liability insurance is available on both a “claims made” basis and on an “occurrence” basis. The most common type of policy is claims made. This means that only incidents and lawsuits will be covered while the policy is in effect. A more comprehensive, albeit more expensive option, is to purchase an occurrence based Professional Liability policy. Occurrence based policies will cover any incidents during the policy period even if a lawsuit is filed after the policy lapses. An occurrence based policy can provide peace of mind and financial security should you change careers or retire as it will protect against lawsuits filed after you’re no longer associated with the business.

The best way to determine what type of Professional Liability insurance you should purchase is to ask a licensed agent in our office. We can assist you with assessing your insurance needs and provide you with some quotes from several of the top insurance companies.