Professional Liability Insurance is the policy for people who make a living off their expertise. Whereas General Liability Insurance covers mishaps that can happen to any business owner, Professional Liability Insurance addresses the unique lawsuits experts may face. The two policies complement each other to provide a broad spectrum of coverage for small businesses.
If your business relies on your expertise, you're expected to have extensive training in your field. Your work must meet standards set by your state, industry, or client contracts. Fail to meet these standards, and you could wind up in court.
A 2017 survey we conducted found that, each year, more than one in five businesses face the kind of incidents (including client complaints and contract disputes) that can lead to professional liability lawsuits and being sued isn't cheap.
A word to the wise: It might be tempting to buy your coverage to win a contract and drop your insurance once the project is done to save money. But to collect your insurance benefits, your Professional Liability policy must be active both… When an alleged mistake occurs and when the claim is filed.
Even if state laws or clients don't require you to carry Professional Liability Insurance, having a policy is still a good idea. It can protect your finances by covering the high cost of a lawsuit.