Professional liability insurance is a type of professional indemnity insurance for businesses that offer professional services and advice. It covers risk exposures such as negligence, misrepresentation, inaccurate advice, and violations of good faith.
If a client sues your business, claiming that your mistake or oversight cost them money, your professional liability policy would help with your legal defense costs. Professional liability can also cover claims that your work was late or never delivered.
There are four steps you can take to find the right professional liability insurance for your business, at an affordable rate:
You can expect to receive different price quotes from insurance companies when looking for professional liability insurance. Some brokers may even specialize in your type of business and can offer policies that are tailored to your needs, yet are still affordable.
You can work with an insurance agent or digital insurance marketplace—like Insureon—to get professional liability quotes from several insurance providers. They’ll navigate the industry to source an affordable policy that provides the right protection for your small business.
At Insureon, you can get small business insurance quotes from top-rated providers with a single online application. Our licensed insurance agents are available to help you customize a policy for your business's unique needs. Once you select a policy, you can get coverage and a certificate of insurance in less than 24 hours.
You know you need insurance for your small business, but where to start? And how can you keep costs down?
Insureon is here for you. You can get customized quotes from top carriers.
Most small businesses start with a general liability policy. You can combine property coverage with your liability insurance at a discount of $57 per month. Maintaining a safe work environment can help you manage risk and lower your insurance costs too.
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Depending on your profession, you might be able to bundle professional liability insurance with another policy, such as general liability insurance. Combining coverage is typically less expensive than buying each policy separately.
For instance, tech businesses typically bundle E&O insurance with cyber liability insurance in a technology errors and omissions policy, also referred to as tech E&O. This policy protects IT consultants and other tech professionals from lawsuits related to mistakes, including poor advice that leads to a data breach at a client's business.
While all professional liability policies provide similar coverage, you can customize this coverage to suit your business needs and reduce costs.
Cost-saving options for professional liability insurance include:
The policy limit is the maximum your insurer will pay out on a claim. If your business gets hit with an expensive lawsuit, you could end up paying thousands of dollars in legal fees if you don't have sufficient coverage.
When choosing limits, you'll want to consider both the cost of your premium and the cost of a potential lawsuit against your business.
Your deductible is the out-of-pocket amount you have to pay before your insurer will cover a claim. If your deductible is $2,000 and you have a $25,000 claim, you would pay the first $2,000 and then your insurance company would pay $23,000.
Keep in mind that while choosing a higher deductible can reduce your premium, your business might end up paying more in the long term if you face a couple of expensive claims. And if a claim doesn't meet your deductible, you'll have to pay the entire amount yourself.
On the other hand, if you think it’s unlikely you’d face a professional liability claim, a higher deductible might benefit your business. You'd pay less for insurance, yet still have the professional liability coverage you need.
Insurance companies typically offer discounts if you pay your entire premium once a year, rather than monthly. Make sure to opt for annual payments if you can afford it, as you'll save money in the long run.
It might be tempting to start and stop your professional liability coverage as needed, such as for the duration of a large project. However, that strategy doesn't work with a professional liability insurance policy.
First, professional liability is a claims-made policy, which means you're only insured for claims filed while your policy is active. If someone sues your business after a project's completion, you could face expensive legal bills if you let your coverage lapse.
If you need coverage for work you've done in the past, make sure to set your policy's retroactive date to cover that time period.
In addition to this, insurance providers charge more when you stop and restart coverage. Maintaining continuous coverage guarantees you're protected when you need it, and also helps keep your premium low.
A professional liability claim can result in an increase in your premium, especially if you have multiple claims or one that’s unusually expensive. That's why avoiding lawsuits is crucial to paying less for this policy.
Professional liability lawsuits typically arise over disagreements between a business and its customers. You can reduce your risk of this happening by communicating openly with customers. Let them know in advance if you expect any problems or delays, and give them a heads-up when you run into an issue that might impact your ability to deliver.
It helps to have detailed contracts that stipulate what services you provide, when you’ll provide them, and how both parties will communicate. Make sure to get every communication in writing, and have clients sign off on any changes.
By keeping your customers satisfied and fully aware of what you’re up to, they'll be far less likely to file a lawsuit.
While professional liability insurance should be an important part of your risk management plan, it doesn’t protect you from every business risk.
Other types of small business insurance you may need include:
General liability insurance: This is typically the first liability policy new business owners buy. It protects against financial losses from customer bodily injuries, damage to a customer’s property, and advertising injuries.
Business owner’s policy (BOP): A BOP bundles general liability coverage with commercial property insurance to protect against common claims and property damage. It generally costs less than buying these two policies separately.
Workers’ compensation insurance: Workers' comp is required in almost every state for businesses with employees. It covers medical expenses for work-related injuries and illnesses, which are not typically covered by personal healthcare insurance.
Cyber liability insurance: Cyber insurance helps small businesses recover financially after a data breach or cyberattack. It's recommended for any business that stores personal information, such as credit card numbers or email addresses.
Complete Insureon’s easy online application today to find affordable professional liability insurance coverage from top-rated U.S. companies. You can also consult with an insurance agent on your business insurance needs, such as other types of coverage or bonds.
Once you find the right policy for your small business, you can begin coverage and receive your certificate of insurance in less than 24 hours.