Professional liability insurance, also called errors and omissions insurance (E&O), protects small business owners against the cost of client lawsuits over unsatisfactory work. This insurance coverage isn't required by Michigan law, but you may need it for client contracts.
Professional liability insurance covers the cost of lawsuits related to the quality of your work, including legal fees and settlements.
It covers the following types of client claims for many Michigan businesses:
Architects and engineers who work on state or government projects in Michigan are typically required to carry an E&O policy.
Michigan law does not require small business owners to have a professional liability insurance policy. However, you might need this coverage to sign a contract or to get a license in your field.
Professional liability is referred to as medical malpractice insurance when it applies to doctors and other healthcare professionals, such as therapists. Michigan state law does not require medical professionals to carry this coverage.
However, you may need malpractice insurance to work in a specific hospital or other healthcare facility.
For example, architects working with the Michigan State Housing Development Authority (MSHDA) must carry errors and omissions coverage [PDF] equal to either $1 million or 10% of the construction contract amount, whichever is the greater number, and list MSHDA as an additional insured.
Any business that provides a professional service or expert advice should carry professional liability coverage, as a client could sue if your service or advice causes accidental harm. Even an unwarranted lawsuit can be expensive between attorney’s fees, court costs, or a settlement.
Industries often at risk for professional liability claims include:
Insurance professionals, including agents and insurance brokers, often deal with large amounts of financial data and must use their best judgment in advising their clients. If a client doesn’t have enough coverage, or the right type of coverage, they might blame their agent or the insurance agency for failing to make sure they were protected.
Even if you’ve done nothing wrong, a disgruntled customer might file a lawsuit if your advice leads to a financial loss.
Get professional liability insurance to protect yourself from claims that you didn't deliver on a deadline, or made a costly mistake.
Some clients require you to have this policy. It can protect you from expensive lawsuits for only about 60 dollars per month.
Don't put your business at risk. Apply for your policy today!
Professional liability insurance covers your legal defense costs if you’re sued over a mistake in your professional work.
Even if you’ve done nothing wrong, a legal battle can be expensive. In addition to your attorney’s hourly rate, you’ll likely be charged for administrative costs such as copying, filing, and travel expenses. You may also have to pay for expert witnesses to testify on your behalf, a court-ordered legal judgment, or a settlement to avoid trial.
Professional liability insurance covers all of the above, up to the coverage limits of your policy. The policy limits you choose should take into account how expensive it can be to fight a professional liability lawsuit. You also need to determine the amount of coverage required to obtain a contract or work in a certain field.
A professional liability policy covers a wide range of lawsuits, but it will not cover intentional harm you cause to others. Most insurance companies exclude:
General liability insurance does not include professional liability coverage—they are both different types of business liability insurance. Commercial general liability covers common business risks and liability claims such as customer bodily injuries, customer property damage, and advertising injuries.
If a customer falls and suffers an injury at your workplace, it would be covered by your general liability policy, which would include your legal costs. If someone sues you over unsatisfactory work, it would be covered by your professional liability coverage.
Read more about general liability vs. professional liability insurance.
General liability and professional liability are often the first two policies bought by small business owners. However, they are not the only coverage you might need.
Workers’ compensation insurance is required for Michigan businesses that have employees. Workers' comp covers medical costs and lost wages for work-related injuries and illnesses.
Commercial property insurance covers your business property, including your building. It’s often required to sign a commercial lease.
A business owner’s policy (BOP) combines general liability coverage and commercial property insurance. It's usually less expensive than buying each policy separately.
Commercial auto insurance is required in Michigan for all commercial vehicles. It covers the cost of an accident involving your business vehicle.
Employment practices liability insurance (EPLI) protects against lawsuit expenses related to claims of harassment, discrimination, and wrongful termination that professional liability typically won’t cover.
Complete Insureon’s easy online application today to compare business insurance quotes from top-rated U.S. providers. Our licensed insurance agents can help answer any questions and provide advice. Once you find the right Michigan business insurance, you can begin coverage in less than 24 hours.