What is professional liability insurance, anyway?
Well, as the name suggests, it is a type of insurance cover. But it’s quite different from insuring your car or your home from damage.
Arguably, it is even more important than these things because it can end up saving you a lot more money. Yes, that’s right. Professional liability insurance might end up saving you more money than the value of your home.
But what’s it all about and how does it work? Well, let’s find out!
Professional Liability Insurance Definition
So, to get things started here is a definition of professional liability insurance.
It is a form of insurance cover that works to protect policyholders from legal action relating to a service that they give clients.
In this way, it is quite different to forms of cover like public liability insurance and personal injury protection. This is because professional liability insurance is only for people working in industries where they offer a service.
How Does It Work?
The insurance process is quite simple. If you offer professional services, you can apply to an insurance company for a protective policy.
The company will look at your business and assess the risk of insuring you. Then, you pay the professional liability insurance cost.
Hopefully, nothing bad happens. But if you are sued, the policy kicks in and you get the financial backing of your insurer.
Who Needs It?
So, what sort of services are covered by professional liability insurance? Well, there are many choices for insurance cover from the beauty industry to car maintenance.
But three main areas in which this insurance is most often used. So, let’s focus on these.
The advice that lawyers give can have serious consequences. Clients can lose money or go to jail if they get poor legal help.
This is why lawyers are some of the first in the queue for professional liability insurance.
Professional medical liability insurance is a very common type of insurance because things can so easily go wrong in the practice of medicine. In particular, many surgeries can end up causing the patient real harm. In the worst situations, a patient may die unexpectedly.
Doctors need insurance because, in these situations, patients and their families often try to sue them for malpractice. These suits can actually be worth millions of dollars.
Financial advisers are also in a tricky situation because, if their clients lose money as a result of their advice, they can also be sued. Of course, there are many protections for financial advisers because they cannot always be expected to get it right.
But insurance is a good idea for those situations in which serious mistakes are made.
Better Safe than Sorry
Professional liability insurance is one of those things that many people don’t think about until they really need it. By then, it’s too late.
So, you should consider factoring in professional insurance when drawing up the budget for your business. It may just save your business as well as your personal finances one day.
Better safe than sorry!
If you’ve found this information useful, why not check out some of our other great articles on business topics?