Small businesses can protect themselves against claims of negligence by their clients or patients by investing in professional liability insurance. Professional liability insurance is also known by other names, including errors and omissions insurance, medical malpractice insurance, and professional indemnity insurance. For non-medical professionals, professional liability insurance is usually called E&O or errors and omissions insurance. For professional who are in the medical field, it is typically referred to as medical malpractice insurance.
Professional liability insurance goes beyond the coverage of general liability insurance. It is quite important for a business to have general liability insurance, as this will protect against liability for bodily injury or property damage. However, professional liability insurance is required if one needs to be covered for failure to perform or errors resulting in financial loss. One of the main differences between general liability insurance versus professional liability insurance is that professional liability insurance tends to cover against financial losses, while general liability insurance covers against physical damages. Further coverage can be added to a professional liability insurance policy, such as breach of warranty and intellectual property coverage. It is vital for small business professionals to protect themselves through the unique coverage fit for their needs.
For example, imagine a software developer was to sell software to a client, and that software did not perform properly. If the software caused the client financial losses, they could make a claim for failure of the product to live up to performance expectations. An errors and omissions policy would cover the software developer in this example. This professional liability insurance policy could cover legal defense costs as well.
Simply put, you need professional liability insurance if you have clients that are paying for your services. While we often do not like to admit it, we all make mistakes, but mistakes made in business can end up costing far more than ever imagined. The lack of professional liability (or errors and omissions) insurance can end up penalizing your business big time. The idea of facing a massive lawsuit and having to pay out thousands of dollars in damages for a seemingly minor error is not appealing. Make sure that you are never in this position as a professional by acquiring comprehensive coverage, beyond general liability insurance, with a professional liability insurance policy. The risk of being found is an affordable solution to shield your business from this risk.
Businesses and personal assets are both shielded by professional liability insurance. This type of insurance can protect the reputation of a business under the scrutiny of potentially false allegations, while ensuring that adequate funds are present in the event that a client does suffer damages.
All businesses should consider their unique needs for professional liability insurance. If you own or work at a small businesses that lacks the financial backing to withstand a lawsuit, it is important consider the risks of ignoring professional liability insurance. Do not take that risk. Play it safe and get a professional liability insurance quote as soon as possible.