How Professional Liability Insurance Protects Small Businesses
Even the smallest startups face the risk of being sued by a dissatisfied client or customer. Without Professional Liability Insurance, such a lawsuit can present an impossible financial burden to a small business, even if the small business wins.
That’s because, in the absence of Professional Liability Insurance, the business would be responsible for paying court costs, attorney’s fees, police report costs, witness costs, and more.
With an adequate professional liability policy (also known as an errors and omissions or E&O policy) in place, however, you will be able to focus on serving your clients to the best of your ability, without worrying how to finance your legal costs.
The expert agents at insureon understand how the risks inherent in operating a small business make Professional Liability Insurance a necessity for most business owners, and they can help you determine which claims scenarios your business is most likely to encounter.
Complete an application today to find a policy that fits your business’s unique needs.
Professional Liability Insurance Explained
When a client or customer claims that a startup’s services caused a financial loss, Professional Liability Insurance kicks in to cover the legal costs that arise.
For example, one of your clients might claim that your business…
- Failed to provide promised services.
- Was negligent in rendering its professional services.
- Provided shoddy, incomplete, or incorrect work.
- Made mistakes or oversights.
Regardless of the merit of those claims, your Professional Liability Insurance pays for your legal defense as well as any judgments or settlements that your business may have to pay to compensate the suing party, up to stated policy limits.
Some professional liability policies also distribute payments for revenue lost while spending time in court, as well as certain other expenses related to your defense.
How insureon Makes Buying Professional Liability Insurance Easier
Get Coverage in Less than Half an Hour. In just 15 from the minute you start your insurance application, you can expect to have a certificate of insurance for the policies your business needs.
Choose from Industry-Leading Policies. Select a policy from the insurance industry’s most trusted providers.
Receive Helpful Advice from Experts. The insureon specialist agents have worked with hundreds of small-business owners to find the right coverage, and they’re ready to answer any questions you have.
Customized for Your Business. Don’t settle for a one-size-fits-all policy, protect your business with a plan designed to protect against to the specific risks you face.
KEY DETAILS ABOUT YOUR PROFESSIONAL LIABILITY INSURANCE
Our professional liability coverage is designed to help solo and small businesses protect their livelihoods if accusations about the delivery of their services arise. Here’s what you need to know as you look over your policy options.
How “Claims-Made” Coverage Works
Most of these policies provide only “claims-made” coverage, which means that your policy must be active both when the alleged incident occurs AND when the claim is filed. This is why many small businesses invest in Professional Liability Insurance and keep the same policy for the duration of their business’ life. If you need to cancel your policy, you may wish to consider purchasing limited coverage for an extended reporting period that allows you to file claims related to prior incidents that occurred when your policy was still in force. Any claims filed after you cancel your policy would otherwise not be covered.
Handling Unfounded, Frivolous, or Meritless Lawsuits
Many small-business owners are confident in their work and feel they don’t Professional Liability Insurance because they believe they won’t make a mistake. But it’s been proven time and again: You don’t have to actually be negligent to get sued. At insureon, we’ve seen lawsuits against small businesses for many claims that were ultimately proven to be unfounded, yet the businesses were still forced to secure a legal defense and fight in court. Professional liability coverage is a smart risk-management strategy for any business because it allows the owner to focus on what matters most, rather than devote valuable resources on the expensive distraction of a lawsuit. p>
Understanding Coverage Limits and Deductibles
Professional Liability Insurance is typically sold in increments of $1 million. Deductibles per claim may be as low as $1,000 and as high as $25,000, depending on your needs and budget.
Finding Coverage for Tough-to-Insure Businesses
Small-business owners and startups in certain industries may have trouble finding adequate small-business insurance. One reason for this is that insurance providers often limit coverage for companies considered to be “high-risk” and those that specialize in certain lines of work. However, thanks to our longstanding relationships with many of the best-rated small business insurance carriers, insureon is often able to secure coverage when many others can’t. Contact our licensed agents for information and a quote.
Understanding What Isn’t Covered
Every insurance policy has exclusions, so it’s a good idea to prioritize your most likely risks and be sure you choose a policy that covers them. The small-business insurance agents at insureon have extensive experience handling variety of claims scenarios. Our team is happy to assist you with your risk analysis. Contact a licensed insureon expert for help.
BUSINESS PROTECTION TIPS
Professional Liability Insurance offers protection in the event of a lawsuit; however, you can minimize the chances that such a suit will occur (and possibly even reduce your insurance premiums) by implementing a comprehensive risk-management strategy that includes these steps.
Use contracts to safeguard your business.
Certain business scenarios aren’t covered by Professional Liability Insurance, including lawsuits alleging that your business lured away one of your client’s customers. The best way to protect yourself against these types of claims is with solid contracts that establish clear guidelines, conflict-resolution processes, and rights and responsibilities for all involved parties.
Don’t cancel your policy without talking to your agent.
Most professional liability policies require continuous coverage at the time of the alleged incident as well as when the claim is filed. If you suddenly terminate your policy, anything that occurred while you were insured will no longer be covered. Be sure to ask your agent about options for continuing coverage on a limited basis if you must cancel your insurance for any reason.
Work to build strong customer relationships.
If you demonstrate genuine commitment to your customers, you may be less likely to face a lawsuit, even if something goes wrong during the course of your work. But misunderstandings and problems do happen, even in the best client relationships, so it’s smart to have insurance just in case.