Conscientious consumers survey the marketplace before making a purchase. In the insurance marketplace, that means getting insurance quotes from multiple providers.
Whether you already have some Professional Liability quotes or not, understanding your estimates is the first step to saving money on small business insurance. Let's explore some of the components of your quotes so you can pick the best deal.
Professional Liability Insurance Explained
Professional Liability Insurance (also called Errors & Omissions Insurance or Malpractice Insurance) covers your business when clients sue you, alleging that your business failed to deliver its promised results.
Lawsuits based on such claims can be expensive. You'll have to pay lawyer fees, court costs, administrative costs, expert witness fees, and the cost of a settlement or judgment against you. All told, that could be tens of thousands of dollars coming out of your pocket, even if your small business wasn't at fault. Luckily, Professional Liability Insurance can cover these costs so you don't have to.
Getting a Quote or Estimate for Professional Liability Insurance
Shopping around is an important part of any large business decision. You wouldn't buy a house without viewing multiple properties and getting an inspection. You should approach Professional Liability Insurance the same way.
You can go about this in a two different ways:
- Contact insurers yourself. Seemingly the most straightforward option, contacting insurance providers directly will get you quotes. However, this won't be the most efficient use of your time or secure you the lowest rates.
- Contact an insurance agent. Independent agents know the insurance landscape and have incentive to look out for your needs (rather than an insurance company's sales quota). They can also help explain the differences between policies offered by different insurers.
Because different insurance agencies specialize in different things, it's important to pick an agency that specializes in Professional Liability Insurance specifically and small business insurance generally.
5 Factors That Affect Professional Liability Insurance Premiums
Though cost is always a consideration, do keep in mind that Professional Liability policies differ in many important ways. Choosing purely on cost can leave your small business underinsured. For reference, the following differences can drastically affect both the price and effectiveness of your coverage:
- Professional Liability policies may have exclusions that specifically don't provide certain kinds of coverage your business needs (e.g., coverage for copyright infringement or cyber liability).
- Professional Liability coverage limits (both per-instance and annual aggregate) can vary drastically from policy to policy. Typically, the higher the limits, the higher your premium.
- Policy limits for different types of included coverage can vary.
- Your company might prefer a higher or lower deductible. Generally, the lower your deductible, the higher your premium (and vice versa).
- Professional Liability policies may or may not include a "right and duty to defend" clause. Policies without the clause will put the burden of managing the lawsuit on your company – meaning you'll need to choose a lawyer, pay his bills directly, and determine case strategies. Giving your insurer the "right and duty to defend" means eliminating drags on your time and resources.
For more information on the "right and duty to defend," our blog post "Small Business Insurance: When It's Worth It to Pay a Little Extra" discusses it in more detail.
What You Need to Know about Professional Liability and "Claims-Made" Coverage
Unlike other insurance policies, Professional Liability coverage operates on a "claims-made" basis. The practical importance of claims-made coverage is timing: incidents and claims arising from dates prior to your policy date are completely uncovered. When examining quotes, it's important to check the coverage dates.
If you need your new policy to cover past events, be sure to discuss your options with your insurance agent.
Cover Your Small Business: Apply For Professional Liability Quotes
Information is power. Contact an Insureon agent now to receive Professional Liability Insurance quotes tailored to your small business's unique needs. Or you can fill out an online insurance application to receive your quotes by email.