Professional liability insurance is defined as a form of insurance that can help pay for legal expenses when clients claim something you did – or didn’t do – hurt them financially.
How professional liability insurance protects your business
No human – or small business – is perfect. This means all are at risk of being sued when they make a mistake or fail to do something important. Professional liability insurance is a safety net for your business mistakes, such as failure to deliver the work product your clients expected and for which they paid.
Professional liability insurance covers your legal expenses in cases where a customer alleges your work was:
- Professionally negligent
- Shoddy or flawed
In addition, professional liability insurance can protect you when clients claim you engaged in misrepresentation or violated principles of good faith or fair dealing.
When your mistake or omission lands you in court, your professional liability insurance will pay for your:
- Attorney fees
- Settlements (money paid to the plaintiff to drop the lawsuit)
- Judgments (money a judge or jury orders you to pay the aggrieved party)
- Expert witness fees
- Court administrative costs
Professional liability insurance does not cover:
- Bodily injuries
- Property damage
- Deliberate wrongful acts
- Violations of law
- False advertising claims
- Employment discrimination
Small businesses that rely on selling their professional expertise (think lawyers, accountants, and engineers) can usually find professional liability insurance as long as:
- Their business model isn’t overly risky.
- They haven’t filed an excessive number of professional liability insurance claims.
Who needs professional liability insurance?
Professional liability insurance is designed for businesses that sell their expertise, such as architects, engineers, lawyers, accountants, and financial consultants and analysts. In theory, medical professionals such as doctors, nurses, and dentists need professional liability insurance, too. But their form of coverage is known as malpractice insurance.
Companies in the following segments will likely have a strong need for this type of protection:
How do I find free quotes for professional liability insurance?
Insureon helps small business owners compare commercial insurance quotes from A-rated U.S. carriers with one easy online application. Start an application today to protect your business against claims of professional negligence.