The expense of malpractice, negligence, common mistakes, and misrepresentation claims suits could be devastating.
Professional liability insurance, also known as Errors & Omissions coverage, is the type of policy that protects a business against civil lawsuits. Many small businesses assume that this is an unnecessary coverage because of their size but in our highly litigious society, it is a greater requirement than they realize.
This type of coverage is also known as an E&O, professional indemnity or malpractice policy.
No matter what you call it, professional liability insurance protects a business from costs associated with civil lawsuits. It is often the first type of coverage purchased by anyone providing professional services. This includes accountants, lawyers, consultants and others. These business owners realize that this type of claim can be among the most expensive they could face and, nowadays, the risk is high enough to make the coverage more than worth their while.
Many business owners assume that they don’t require this type of coverage because they already have general liability insurance. That said, many general liability policies cover only personal injury, bodily injury, or property damage. Claims relating to services are often excluded from general liability policies.
Professional liability insurance protects businesses sued due to the outcomes of their services.
When clients receive unexpected results or services that were not reasonable in their eyes, they could sue. It is in these types of cases when this form of policy would provide coverage. As such, this type of policy is particularly beneficial for any business offering professional services. Regardless of whether it covers architects, real estate agencies, consultants, medical experts, tech companies, engineers, accountants, wedding planners, lawyers, or others, if a service is provided, there is the chance that a customer may not receive what he or she was expecting, and that could result in a lawsuit.
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Legal defense costs or litigation could be exceptionally expensive, endangering the financial survival of a small business or even the personal assets of the owner, depending on the nature of the company. As a result, Enbroker recommends that any small business offering a service would be well advised to look into what a professional liability insurance policy provides.