When you are a professional services provider like a designer, an accountant, or a consultant, you are entirely responsible for your service delivery. Unfortunately, because errors can happen, you put your clients at risk for anything you might miss when you provide your services. This can also put you at risk, as clients might decide to seek compensation for any trouble or damages you cause through your negligence.
When this happens, you want to know you have the funds required to cover costly lawsuits filed by your clients. Any losses or damages caused by your mistakes could put your practice or small business at risk. Professional liability insurance is a must if you want to protect yourself and your business from potential lawsuits.
What is professional liability insurance?
Professional liability insurance is designed to protect you should you make errors in the work provided to your clients. Even slight errors can cause losses and suffering for your clients, and they might be inclined to sue to make up for the damage.
No matter how good you are at your job or how much experience you bring to the table, errors as simple as missing a minor detail can have long-lasting repercussions for your clients. You need liability insurance to help pay for any damages or suffering you cause through your negligence.
Even if a client decides they don’t think you delivered the quality of professionalism expected, you could face a lawsuit. Professional liability insurance is your best protection against these risks.
Who needs professional liability insurance?
If you provide a service for a fee, you need professional liability insurance. This includes creative services such as writing and photography, technical work such as IT consultants or web designers, and any consulting service where you provide expertise in exchange for payment.
How does professional liability insurance work?
Professional liability insurance provides you with complete peace of mind. However, it is also the best way to protect your clients from mistakes you might knowingly make or damages you unintentionally cause.
If a client feels you failed to deliver the service required, you are covered from lawsuits they choose to pursue. As a professional, you want to stand behind your work. Should you fail to meet your clients’ satisfaction, your liability insurance protects you against any action.
Insurance protects you against financial ruin while providing clients with the compensation they deserve. Depending on what type of services you provide, even a small mistake can have a terrible impact on your clients. You also become vulnerable to losing your livelihood if you don’t have the finances to support a lawsuit.
Some common scenarios for lawsuits and liability insurance claims include:
- Accusations that your work harmed your client personally or professionally.
- You missed crucial details in your work.
- You are accused of something you did not do, and you want to fight the client in court.
All of these situations are covered by your professional liability insurance, protecting you and your business from insolvency.
How can I protect my business from professional liability risks?
There are steps you can take to avoid a professional liability lawsuit:
- Always work with a written and signed contract that outlines the details of the services you provide, including deadlines and anything you do not include in the agreement that might commonly be missed.
- Be efficient in communication to ensure your clients always know of any potential issues, so their expectations are more likely to be met.
- Know your business and ensure you engage in best practices for your service, including quality control policies that help you maintain a high standard that ensures your work is above scrutiny.
- Make sure you have someone to assist in reviewing your work to avoid errors or omissions lawsuits.
- Have a detailed approval process to take the blame off your shoulders and involve your clients in signing off at each crucial step. This will make it more difficult for them to pursue a lawsuit claiming negligence on your part.
- Use a list to double-check you are delivering all agreed-upon services.
- Once delivered, follow up with clients promptly to ensure all is well. If there is an issue, you can correct it instead of providing them with a reason to take legal action.
The more processes and policies you have to protect your clients, the more you are protecting yourself. Your professional liability insurance is there as a backup should your due diligence and best practices still leave an opening for clients to pursue legal action against you.
What other commercial insurance do I need?
There are many types of commercial insurance policies available. The type of business you run, how it is owned, the product or services you provide and even the equipment or location where the service is provided with all work to determine what coverage is best for you. Some examples of business insurance include:
- Contractor insurance
- Commercial auto
- Office package
Speaking to a commercial insurance broker will help you find the best-customized package for your business needs.
Coverage is subject to policy wording, terms, conditions, and deductibles. Protection is limited to the perils, coverage, exclusions, and limits shown on the policy.