Professional liability insurance, also called errors and omissions insurance, protects service businesses from the cost of defending negligence lawsuits and other claims of service-related errors. Service professionals and business owners who provide expert advice should purchase professional liability coverage.
Succeeding in a service industry or profession can be difficult. No matter how well you assess a client’s situation, things sometimes don’t go as planned. Professional liability coverage is designed to help service professionals who are sued by customers for an alleged mistake or failure to act. If you provide expert advice or services, this policy is a necessity.
Who Needs Professional Liability Insurance?
Professional liability insurance is designed for any small business owner who provides a service or makes a living from their expertise. There are some medical and legal professions that may even be required to obtain the coverage in order to practice service. Be sure to speak with your agent about how small business liability insurance can benefit you.
Examples of business owners who should purchase professional liability insurance:
- Architects, designers, and engineers
- Real estate brokers
- Financial consultants
- Accountants and bookkeepers
- IT professionals and programmers
- Marketing and advertising professionals
- And anyone else who provides goods and services to clients!
Do you provide advice or services to clients who could potentially experience harm as a result? No matter how careful you are, mistakes can easily happen due to miscommunication or if employees don’t follow training procedures. Professional liability coverage is the primary type of insurance to protect you against lawsuits that claim service-related errors.
Professional Liability Insurance Coverage
Professional liability insurance covers any claims related to the provision or failure to provide a service. Negligence is the most common type of legal claim that professional liability insurance protects against. However, covered lawsuits can also allege misrepresentation, breach of contract, or violation of good faith and fair dealing. Depending on the scope of the professional liability policy, it could also extend to invasion of privacy claims, pollution liability, and copyright infringement. If your business is sued and you have professional liability insurance, your lawsuit defense costs are covered.
Examples of Professional Liability Insurance Claims
Professional liability insurance covers a wide range of incidents. Examples of incidents that would be covered by a professional liability policy are as follows:
- An engineer builds a faulty website for a client that goes down just before a product launch. The client sues the engineer for negligence and loss of income.
- A doctor misdiagnoses a patient’s condition, causing them mental anguish and increased medical costs. The patient might sue the doctor for malpractice.
- An architect uses poor materials to construct a new building. The building collapses mid-way through construction, and the client has to rebuild. The client company can sue the architect for negligence.
- A company contracts with a supplier for raw materials, but the supplier fails to do a quality assurance check as specified by the contract. The client is unable to use the materials and suffers lost sales as a result. They can sue the supplier for breach of contract.
- A company’s marketing team inadvertently uses another company’s copyrighted images in a campaign. The image owner can sue for copyright infringement. It is in your best interest to consider if small business liability insurance is right for you.
About Bozzuto & Co. Insurance Services, Inc.
Bozzuto & Company Insurance Services has provided business and personal insurance solutions to clients throughout California since its founding in 1981. Our experienced staff understands the unique needs that each person has when insuring their lives and their businesses, and we pride ourselves on our deeply personal customer service. We are happy to help you through every step of the insurance selection process. Contact us today at (800) 400-6394 to learn more about what we can do for you.