Professional Liability Insurance Information
What is professional liability insurance?
If you own a business, particularly in the service fields, you face risk in being sued whether you actually made a business error or not.
Professional Liability or proliability insurance protects you and your business from losses related to lawsuit claims due to an error or mistake in your rendering of professional services.
This specialty insurance type is also known as errors and omissions insurance. It protects you as a business owner against lawsuits arising from mistakes you may make, negligence, incomplete work, missed deadlines, or work considered to be low quality. In all these situations, the customer has to experience financial or other harm.
Examples of Pro Liability Claims
PLI Example 1:
CPA Error: Professional Liability
When certified public accountants (CPA’s) may make advising errors or typographical errors on tax returns or financial statements that place a financial burden on customers that they would not have had otherwise.
In a recent audit by the Tennessee Department of Labor one of the accountants at CPA Group of Nashville input the independent contractor agreement information from another client into her spreadsheet. This incorrect information was included in the audit report to the State of Tennessee in error resulting in fines from the state and additional work to correct the documents and resubmit.”
While the error was not intentional, it did cause financial harm and could result in a lawsuit. Professional liability insurance can protect the CPA Group of Nashville from financial damage and defense costs.
PLI Example 2: Printing Company Mistake:
Another example involves printing for a bank grand opening event.
A Nashville printing company was late with printing of flyers and banners for the event and did not complete the job in time to be used at the grand opening. The materials were essential to the event and the bank suffered a loss in expenses related to rescheduling the event.
A claim could be filed by the client and professional liability insurance would kick in to protect the insured business. Professional liability insurance would protect the local printing company in this situation.
PLI Example 3: Commercial Construction Failure to Meet Code Compliance
A commercial construction firm failed to meet Tennessee code when building a swimming pool for a new hotel in Downtown Nashville. The hotel incurred expenses in hiring a new commercial contractor to remedy the situation and delays in opening.
What is covered with professional liability insurance?
- Legal fees and court costs range from $2500 to $200,000 in most cases. This includes your lawyer’s hourly or flat rate fees for your defense and things like funding testimony from expert witnesses.
- Administrative fees
- Expense of losing in the form of judgement or settlements can present the bulk of the risk comes in for a business. Expenses here can tally in the hundreds of thousands and put businesses under that were not properly protected.
What is the cost of professional liability insurance?
The annual premium expense depends on your type of business, coverage limits, location, claim history, and other factors. For a smaller business, the average expense is $1000 to $3000 a year to give you an idea.
The population growth in Tennessee has sparked numerous business relocations and new start-up businesses. Business insurance is always an important consideration as it protects a business from losses not covered by a general liability policy, such as defending lawsuits for errors and omissions. Professional liability insurance is essential for those businesses who provide advice for a fee, such as consultants, website content writers, technology firms, lawyers, and brokers, to name a few.
Professional liability insurance (PLI) is also referred to as professional indemnity insurance (PII). It protects individuals and companies from assuming the full cost of defending a lawsuit that claims negligence. Claims such as negligence or errors and omissions are not customarily covered under a business’ general liability insurance policy. For this reason, professional liability insurance is critical for those who provide a service or advice for a fee.
Who Needs Professional Liability Insurance
Which professions and business types need professional liability insurance? Any service-oriented business who provides a service or advice for a fee falls into this requirement. One commonly thinks of an attorney or accountant for this type of insurance, yet the insurance need applies to architects, technology firms, and even event planners. Depending on the profession, professional liability insurance may take on different forms and names. In the medical field, it is commonly called malpractice insurance. For attorneys, brokers, technology firms, or accountants, it is often called errors and omissions i or E&O insurance.
List of Businesses Who Need to Carry Professional Liability Insurance
The following is a partial list of business professionals with expected expertise in their fields who should carry this insurance.
Have a question? Ask our business agents at (615) 829-8457
|Professional Liability Insurance Industry List
|IT and Technology Companies
|CPAs and Tax Professionals
||Skilled Trades Contractors
|Hair Stylists & Nail Salons
||Photographers and Videographers
Rise in Errors and Omissions Lawsuits
The number of liability lawsuits against professionals is on the rise. The risk of facing a lawsuit as a fee for service type business is much higher than it once was. Such lawsuits can mean financial ruin both professionally and personally, including the loss of cars, homes and careers. Professional liability insurance helps with the financial burden of these events.
Benefits of Professional Liability Coverage
Any professional who provides a service, expertise or advice to clients for a fee can benefit from coverage against liability lawsuits. Even with quality employees and risk management practices in place, people still make mistakes. A general liability policy may not cover mistakes that could be made. Professional liability insurance will protect the business and its finances if such an event arises.
Free Quote from Local Agency
Our local agents at Montgomery & Associates Insurance & Financial Services will evaluate your business to determine its unique insurance needs and find you the professional liability policy with the needed coverage, avoiding excess. Our agents provide multiple carrier quotes (including Progressive Commercial). That way you can get the best coverage at the best rate. Call us if you have questions or want to get started. Our agents are dedicated to helping you acquire get the protection you need.
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Professional Liability Insurance Quote Forms
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