The 5 Best Benefits of Professional Liability Insurance
Have you been considering getting professional liability insurance (AKA professional indemnity insurance)? Have you been feeling a little unclear about what exactly are the benefits of protecting your business with this type of insurance? In this guide, we clearly explain what the 5 best benefits of professional liability insurance are.
What is professional liability insurance?
Professional liability insurance is just another name for professional indemnity insurance. They’re both the same policy – just called different terms. Professional liability insurance protects you from negligence, errors & omissions, subcontractor errors, IP infringement, defamation, and many more legal claims. It’s a very useful cover that almost all business owners should seriously consider carrying at all times.
Benefit 1: You’ll have access to top class lawyers against lawsuits.
One of the most critical benefits of professional liability insurance is having guaranteed access to the industry’s best legal firms. If you have professional liability insurance when you get sued, in most cases the insurance company will take over the lawsuit. After the insurance company takes over your lawsuit, they will appoint their own lawyers to defend you. What does this entail? Well, if the insurance company’s lawyers are defending you, you can be very certain that the lawyers you’re getting are going to be absolute world-class. Insurance companies have huge resources to engage the absolute best lawyers in any country they operate in. It’s in their best interests to see you win, because if you lose, they’ll have to pay your claim!
When you buy a professional liability policy, you’re not just purchasing protection against lawsuits. You’re also purchasing access to the best legal defence around. The best part is, with your policy, you won’t have to pay for such star legal power – the costs are borne by the insurance company.
Benefit 2: You’re a lot less likely to go bankrupt or lose huge amounts of money from lawsuits.
Another one of the key benefits of professional liability insurance is that this policy will save you from suffering huge financial losses or outright bankruptcy. Imagine you run a consulting firm, and you worked on a big project for a client. The contract value was several hundred thousand dollars – and you couldn’t have been happier at all the money you made. You made sure to double-check all your work and proposals, giving thoughtful business advice that was encouraging yet never over-promising. However, after implementing your advice, your client ended up suffering losses. Your client turns around and blames you for the dip in profits now afflicting their business. They then sue you for hundreds of thousands of dollars. Even if you were completely innocent and the losses were due to your client’s own mistakes, you still have to defend the lawsuit filed against you, right? And lawsuits cost money to defend – a lot of money.
Carrying professional liability insurance is thus vital to prevent your business from being shot down by a hugely expensive lawsuit.
Benefit 3: You’ll be able to easily meet liability insurance requirements from clients.
Some client contracts will require you to show proof of professional liability insurance before you can be awarded the project. With professional liability insurance, you won’t have to worry about whether you can meet such requirements or not. Clients often require this not only to protect themselves against potential mistakes made by contractors/suppliers, but also to weed out smaller players that can’t afford (or don’t have the foresight/expertise) to carry such insurance in the first place.
Benefit 4: You’ll appear highly professional and earn more respect from clients.
SMEs that have professional liability insurance send a clear message to their clients and business partners. Carrying professional liability coverage lets them know that you understand the risks of legal liability, and have taken on coverage to . It also helps to differentiate your business from competitors that don’t carry professional liability insurance. Clients tend to give greater respect to businesses that carry this coverage.
Benefit 5: You’ll be protected against government fines if you breach regulations.
Another one of the top benefits of professional liability insurance is protection against civil fines and penalties for regulatory breaches. For instance, if you make a mistake as an engineer, you can be fined for flouting governmental standards on building codes. If you’re a lawyer and make negligent mistakes while handling a client’s lawsuit, you can be fined for such conduct. In each of these scenarios, professional liability insurance would step in to protect you from the fines levied upon you by the state.
Of course, this isn’t meant to be an excuse to go out and break every regulation in the book. But it’s nice to know that when you carry professional liability insurance, you’re well safe against even governmental penalties against you! It’s certainly very comprehensive liability protection.
Cost-Benefit Overview
Professional liability insurance from Provide starts from about $42/month, which works out to about $650/year. This starting premium will get you around $100,000 to $200,000 in cover, with more coverage available for nominal increases in premiums. For context, market rates for professional liability insurance start from about $1,000, so you will definitely reap significant savings for yourself when you use our online platform.
That said, some SME owners look at the $650-dollar cost and still balk. However, when you consider that you’re getting $100,000 to $200,000 in coverage for $650, then the sheer benefits of professional liability insurance you’re getting becomes much clearer, doesn’t it? If someone sues you for $100,000, this $650 policy could potentially save your entire business from financial devastation, or even outright bankruptcy. It’s important to view liability coverage as an investment, where the costs are actually relatively minimal compared to the protection you receive.
Ready to protect yourself with professional liability insurance?
Provide is the best place to get professional liability insurance online quotes. Save up to 25% on your premiums when you use our platform. Our online operating model creates lower overheads, so we pass every dollar saved back to you. Start your quote today!
