Professional liability insurance is coverage that provides protection against claims of negligence or errors made by you in the course of your profession. It also covers expenses associated with defending claims and pays judgments up to the limits of your policy. ch type of insurance is different, but property insurance typically provides coverage for a specific property while professional liability insurances protect a person’s ability to do his/her job. Here are 6 important things you need to know about professional liability coverage.
The Types Of Insurance Policies That Require A Professional Liability Policy
There are three types of professional liability policies:
- Errors and omissions (E&O) insurance cover the risk of an insured person’s negligence or errors in judgment. It also pays legal fees associated with defending against such claims as well as some settlements and judgments for claims brought against you.
- Contractual liability insures a company for liabilities that arise from contracts it enters into, such as client agreements to provide services or sell products.
- Direct writers, which is what auto insurance agents typically represent, is a business that provides liability coverage directly to commercial policyholders rather than through brokers.
The Costs And Benefits Of Professional Liability Coverage
A standard professional liability insurance policy is designed for a person who works as an independent contractor, not as part of a larger company. This policy covers claims from any client or customer and pays damages up to the limit selected by you. When deciding how much coverage to buy, consider the potential costs associated with defending against a claim versus the cost of settling one. You might also want to consider what would happen if you were forced into bankruptcy because of a claim that exceeded the limits on your policy. In most states, professional liability policies are “occurrence-based,” which means the policy will pay claims based on actions that took place while you were insured, not based on the date a claim is filed.
What Kind of Professionals Require Professional Liability Security?
In general, any profession which may have an impact on other people requires some form of professional liability cover. Examples include doctors, dentists, stockbrokers, and accountants among many other professions.
Even if you perform a service, such as freelance writing or teaching piano lessons, you may need to carry a professional liability policy if your clients depend on your services.
Finding The Right Insurance Agency For Professional Liability Coverage
Insurance agents that represent only one company may not be able to give you the best advice or find you the most competitive rate on your professional liability policy. When choosing the right insurance agency make sure they have relationships with several insurance carriers and specialize in professionals such as yourself. This will ensure they have the proper knowledge and expertise to provide you with dependable coverage at a great price.
The Importance Of Asking Questions When Shopping For Professional Liability Coverage
When shopping for a professional liability policy, be sure to get an explanation of the exclusions and limitations. It’s also important to understand what is covered under each policy you are considering so there are no surprises should a claim arise. Ask about the procedures your insurance company uses in handling claims and how quickly you can receive a check once a claim is paid. Also, compare the cost of replacing lost income with the amount of coverage offered by different policies to ensure that you will have enough money to run your business if you’re forced to stop working because of an injury or illness. Do not assume that all companies offer similar coverages; it’s vital that you do your research.
The Importance Of Reviewing Your Insurance Policy On A Regular Basis
Typically, if you review your auto policy on a yearly basis and make changes as needed, you know how often it’s necessary to adjust your insurance coverages for other types of insurances such as homeowners or life insurance policies. The same goes for professional liability—you should review your policy annually and make any adjustments to your coverages as needed. The reason being is that you could be under-insured or over-insured without realizing it. Under-insurance occurs when a professional has a large claim and the limit on their coverage isn’t enough to pay for it. Over-insurance happens when a professional hasn’t been sued in years but still pays for insurance to cover possible future claims.
By understanding the right questions to ask when shopping for professional liability coverage, many professionals can avoid these situations. An insurance agent who specializes in clients like you and has relationships with several carriers will be able to find you the best policy at a great price. Make sure you review your policy regularly (at least once a year) and keep up-to-date with any changes that may occur during this time. By doing so, you’ll know that your policy is always running efficiently and that your business is protected from any unforeseen events or accidents that could happen on the job. Overall, having peace of mind that you have the right professional liability coverage will enable you to focus on what’s important— your business.