In Case of Emergency: Protecting Your Business With Liability Insurance

We have car insurance in the event of a traffic accident. We have home owner’s insurance if there is a break in or natural disaster – but are you prepared to protect your business?

Professional Liability Insurance, also referred to as Errors & Omissions Insurance (E&O) or Malpractice Coverage, keeps your company protected. No one is perfect and we all can make common mistakes – and it is important to be protected in these types of situations.

There are a few terms you may have seen for this type of coverage:

• Malpractice Insurance is used in medical professions.
• Error & Omissions Insurance for real estate agents.
• Professional Liability Insurance generally covers all other business owners.

The name can differ in various professional circles, but in the end, it works the same.

What is Professional Liability Insurance?

A single lawsuit could hurt your business beyond repair. A professional liability policy can help alleviate the financial burden of a lawsuit, protecting your business following a claim. Professional liability insurance policies are generally arranged on a claims-made basis, which means coverage is only good for claims made during the policy period.

For example, if a service you provided did not have the expected or reasonable results in the eyes of your customer, you could be sued. This policy can protect you financially from these types of claims.

Who Needs Professional Liability Insurance?

This type of insurance is useful for any business that offers professional services. This includes but is not limited to lawyers, accountants, investment advisors, consultants, real estate agents, architects, engineers, and medical experts.

Professions that require specialized training and must meet certain state, industry, contract or client requirements, should look into a professional liability insurance policy.

If you are unsure about whether you fall into this category, here are some questions to consider:

• Are my clients at risk of monetary damages if I give bad advice or make a mistake?
• Is there material impact on my clients if I make a mistake?
• Do I ever make suggestions or claims that could be misconstrued?
• Is there a wide variation of the services I provide from person to person?

If you answer “yes” to any of these questions, you should have a professional liability policy. If you still have questions, contact Chastain Otis to discuss your options.

How is Professional Liability Insurance different from General Liability Insurance?

You may be asking, “Can’t I just get general liability insurance?” Understanding how a general liability policy and professional liability insurance compare can help you decide which is best for your situation. In the end, you may find that you need both.

Similarities

Both general and professional liability policies are designed to:

1. Protect against business liabilities: They both help alleviate the financial burden of a lawsuit on your company.
2. Meet contractual requirements: Some employers or clients may require you carry a specific amount of liability coverage before working with them.

Differences

The big difference is the type of risks covered:

• General Liability protects against physical injury or damage to property from daily operations.
• Professional Liability covers negligence related to a professional service or advice.

Think of it as financial loss versus physical injury or damages.

What’s Missing in Professional Liability Insurance?

It always depends on the policy. But in general, not all forms of legal liability are covered. Coverage also does not include criminal prosecution. Coverage for data breaches or other technology may not be included, and for that, you would need to look into a Cyber Liability Insurance policy.

Finding the Right Liability Insurance for Your Business

Obtaining the proper coverage for your company doesn’t have to be difficult. Contact Chastain Otis Insurance to speak with an independent agent today to get you the right policy for your business and answer any questions you may have.