Professional liability insurance
Professional liability insurance, which is also referred to as professional indemnity insurance, is a form of insurance that keeps your business protected. It is difficult enough to keep a business afloat, so the last thing you need is to be sued by a dissatisfied customer or to otherwise find yourself in financial trouble over a business mistake. With the help of professional liability insurance, you can prevent bankrupting your business and keep things operating smoothly in times of trouble.
Getting Protected by Professional Liability Insurance
There are many ways that professional liability insurance can keep your business protected, with all of those ways falling within one of four different categories. These categories include:
If a customer feels that you have breached your duty or failed to provide the proper level of care, this can be seen as negligence. With professional liability insurance, the damage the customer incurs from the negligence is compensated.
The intellectual property coverage keeps you protected in case you accidentally infringe upon someone else’s trademark, copyright, or broadcasting rights. This coverage is particularly beneficial if you work in a creative field such as writing or graphic arts.
Professional liability insurance can also protect you if you accidentally lose documents or data that your client entrusted to you. The same is true if the data or documents are accidentally damaged or if they are stolen.
Your professional liability insurance will even protect you if you blatantly steal your client’s money or engage in any other dishonest act that adversely affects your client.
Determining the Amount of Coverage You Need
Since every business is different there is no “standard” amount of professional liability insurance coverage to have in place. Since some businesses are inherently riskier than others, those businesses would require a greater amount of coverage. In fact, the businesses that can benefit from professional liability insurance are quite varied. These include:
Obviously, a medical professional takes a greater risk with his or her job than a website developer, since a mistake made by a medical professional can result in the loss of life. Therefore, a medical professional may require more coverage than a website developer.
In general, you should simply cover as much professional liability insurance as you can afford. At the same time, you should keep in mind that certain clients will require a minimum amount of coverage before they will use your services. If you want to win a contract with the UK government, for example, you will need to have at least £5 million in professional liability insurance coverage.
When purchasing a professional liability insurance policy, you might also want to consider obtaining retroactive cover. With the help of retroactive cover, you will receive protection for work that you have completed in the past and before the policy was put into place. Although adding retroactive coverage will increase your premium payment, the extra cost may be worth the added protection you receive.