Professional service providers face unique risks that could land them in legal trouble. With our industry expertise and a substantial network of brokers, we can help protect your professional services company with professional liability insurance.
What is professional liability insurance?
General liability, product liability, professional liability… there’s a number of insurance products out there that sound similar, but you need to choose the right one for your business. The question is: what’s the difference between professional liability insurance and other types of liability insurance?
Professional liability insurance helps cover the costs of defending a claim brought against your business due to your alleged professional negligence. It’s also known as errors and omissions insurance (E&O), and it can protect you in situations where:
- You’ve made an error in your work
- You’ve omitted an important element
- You’ve provided incomplete or inadequate service
If your mistake results in financial loss to a third party, legal action could be brought against you and your business. Although commercial general liability (CGL) insurance can protect you in certain legal situations, the complicated nature of professional liability claims can call for more specific and extended coverage.
Who needs errors and omissions insurance?
When you provide a professional service – like management consulting, accounting, or legal counsel – improper advice or inadequate work can harm your clients. In many cases, you’d be responsible for the financial loss and costly lawsuit expenses that may result.
Professional liability isn’t always straightforward. In fact, there’s no universal liability coverage for professionals; different professions can face different risks and will require different insurance solutions.
In some cases, professional liability insurance will cover financial loss, and in other cases, it will provide protection against bodily injury claims. Some professional classes will even have elements of both. You’ll need an E&O policy that’s designed for your line of work and your unique business.
Some professions that may need professional liability insurance are:
- Management consultants
- Interior decorators
- Graphic designers
- Photographers
- Accountants
- Architects
- Lawyers
- Real estate professionals
How can professional liability coverage help me?
You might be surprised at how seemingly simple errors can qualify as professional service blunders. Fortunately, errors and omissions insurance can help you out in a number of ways, and in a variety of situations. Here are a couple of examples:
Financial Protection
A small mistake in service can be enough to drain your client’s bank account, and that financial loss could fall squarely on your shoulders. For instance, a real estate agent fails to complete the necessary tasks to close the sale, and as a result, their client loses their deposit and demands compensation from the real estate agency.
In another case, an interior designer decides to use a stylish new carpet to update a home, but the fibre provokes an allergic reaction, landing the susceptible homeowner in the hospital. Even if no damage was caused, the redesign and replacement of the flooring will need to be covered, and the client may come to your design business for that money.
In either of these cases, the right professional liability insurance can pick up where a CGL policy ends, helping to cover the compensation costs you’re ordered to pay to your client.
Legal Support
Professional liability lawsuits can be extremely expensive. Without the right support, you may have to pay for all legal fees out of pocket, and that can be enough to leave you financially destitute.
Claims brought against professional services businesses are often complex; when your work doesn’t directly cause injury or property damage, there may be more factors at play. This can mean longer, drawn-out proceedings that can drain your bank account quickly.
Professional liability insurance may be able to help cover your defense costs, even when the legal action is groundless. Our professional liability coverage also includes Legal Assist*, a service that provides access to advice on legal matters, no matter how small, whenever you may need it.
Liability expenses can hurt your bank account, but the ordeal can also call for major public relations work to rebuild trust with your client base. When your insurance policy takes care of some of the stress and expense of a looming lawsuit, you can focus your effort on where your business needs it most.
What can a broker do for me?
An insurance broker can be your greatest asset when it comes to finding the right insurance policy. A broker brings a wealth of insurance expertise, product knowledge, and personalized service to the table, working to protect your company and your peace of mind.
Northbridge believes in the power that comes with good partnerships. Our preferred network of reputable brokers can help craft a comprehensive policy that’s suited to your unique professional services business.
Are you managing your risk?
Risk is a part of life – risk management should be, too. It can be challenging to make space for risk mitigation in your daily routine, but this is a corner that shouldn’t be cut. After all, even if you have the right insurance coverage, preventing a loss is always better than recovering from one.
Risk management solutions can be as simple as improving the layout of your workspace, or as involved as launching a company-wide training program. Our Risk Services experts can help with both. In fact, we’ve made access to risk management expertise a fundamental feature in every commercial Northbridge insurance policy.
*Services not provided for criminal, personal, or insurance issues, do not provide representation in legal proceedings or legal fees coverage, and are not an insurance policy. Services provided by Assistenza International, through lawyers licensed in your jurisdiction. Not all insurance policies are eligible, contact us for details.
