- Professional liability insurance
Professional liability insurance protects small businesses by covering legal defense costs, settlements, and judgments from client lawsuits claiming that work was unsatisfactory.
Professional liability protects against mistakes
When a client has a complaint about a service or product that your business provides, you need to be prepared for the consequences. Lawsuits can place a huge burden on daily operations, especially for a small home business with limited resources. Professional liability insurance (also called errors and omissions insurance or E&O) can cover legal fees that might otherwise put your business in jeopardy.
E&O insurance provides liability coverage related to:
- Professional mistakes or oversights
- Failure to deliver promised services
- Missed deadlines
What coverage can professional liability insurance provide for home-based businesses?
Professional mistakes or oversight
Whether or not you’re in the wrong, being accused of a professional error can be expensive. A client could claim that a DJ didn’t play appropriate songs, or a customer could receive incorrect baked goods from a home baker. If sued, you could face legal defense fees or a costly settlement. Professional liability insurance helps cover attorney’s fees, settlements, judgments, and fines related to poor decisions and other work mistakes.
Failure to deliver promised services
Clients can be demanding, and they might turn to the courts if they think you didn’t do a good job. For example, if a bride claims a wedding planner failed to meet her expectations on the big day, she could file a lawsuit. Your professional liability insurance policy would cover legal costs related to allegations of unfulfilled or unsatisfactory services.
You strive to provide your services in a timely manner, but sometimes it’s difficult to control the outcome. For instance, a writer could have trouble meeting a deadline that sets a client back. If the client sues, you might have to pay a costly judgment or a settlement to resolve it out of court. Professional liability insurance can take care of these costs and more.
Other policies for home-based businesses
While E&O insurance protects against work mistakes, it does not provide complete protection. Accidental injury and property damage are risks for anyone who owns a home business. Other policies to consider include:
General liability insurance: This policy can pay legal expenses related to customer property damage and injury, along with advertising injuries such as slander.
Business owner’s policy: This policy bundles general liability insurance with commercial property insurance at a lower rate than if the policies were purchased separately.
Get free quotes and compare policies with Insureon
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