Tuesday, May 24, 2016

Do You Need Professional Liability Insurance?

Running a small business can be very satisfying. You are your own boss and can do things the way you want with, generally speaking, and no one to answer to. However, the situation also has its downside. When something goes wrong, you are the one responsible. No matter how careful you are, mistakes and errors can occur. Even if nothing is wrong, a client could feel that he has suffered because of an action on your part. Or it could be a case of malicious intent. Whatever be the reason, you could be exposed to liability that could ruin you and the business you have worked so hard to build. Thatis why Professional Liability Insurance (PLI) is essential.

What Is PLI?

Professionals are expected to possess extensive knowledge in their field of specialization. They are expected to use this knowledge and their skills to perform services for which they are retained and do it at accepted industry standards. If the services are not up to standard or if the client thinks that is the case, the business can be taken to court for the damage that the client has suffered. This is professional liability.

Professional Liability Insurance is also known as Errors and Omissions Insurance (E & O Insurance). It protects you from claims of negligence or inadequacy of service when the advice or professional services given to a client do not meet the client’s expectations. There are various coverage options including:
  • Negligence (either actual or alleged) –You are covered against claims for deficiencies in professional service, such as failure to deliver, providing incorrect advice and omissions.
  • Personal Injury (libel or slander) –This protects you against both libel and slander claims if the actions were committed as part of your professional services.
  • Copyright Infringement – If any copyright infringement occurred during the course of your professional services, you are protected from claims for damages or expenses.
  • Defense Costs – When legal defense has to be mounted against claims for activities or actions covered by the policy, the costs of the defense are covered.
It should be noted that a client may require your business to carry PLI before entering into a contract with you. This will provide him the comfort of knowing that if he should suffer on account of any acts or damage on your part, compensation will be available.

Professional liability is a serious subject and a complicated one and having insurance cover to protect you from claims and lawsuits is the best way to protect your business. Remember, even if the case goes to court and the verdict is in your favor, the costs of defending yourself could be huge. The advice of an insurance professional will guide you to the right type of cover and the amount of protection you need. Even if you already have PLI, has it kept pace with the growth and changes in your business? A professional will be able to work with you to examine your existing coverage and recommend the modification you need to remain fully protected. Consulting your insurance broker about PLI coverage is not something you want to delay.

Understanding Cyber Risk Insurance

A data breach can bring your business to its knees overnight. Ask any cyber security professional and you will be told that there is no such thing as 100% security, as Sony Pictures knows. Obviously protecting your data is vital, but if it is hacked, what do you do next? You plug the holes and improve your defenses. But the damage has been done and it could break you. Your only protection against the financial loss is to transfer the risk. And that can be done through Cyber Liability Insurance Cover (CLIC).

CLIC Coverage

CLIC is a wide ranging term that includes a variety of options. Among them are:
  • Data Breach and Privacy Risk Management: This will cover the costs of managing the breach such as investigating the cause / source, fixing the problem, data subject notification, call management, checking credit for data subjects, regulatory fines and legal costs.
  • Extortion Cover: In other words coverage of any losses due to extortion and any fees for professional services to deal with the issue.
  • Liability for Network Security: This includes third party damages for issues like denial of access, costs related to third party suppliers and expenses due to theft of data on third party systems.
  • Media and Multimedia Liability: This will cover costs related to issues like infringement of intellectual property, defacement of websites and so on.
In some cases CLIC can overlap existing insurance coverage, in part or whole. An insurance professional will be able to advise you on what you are already covered against and what more you need.

CLIC coverage can range from highly complex policies that provide coverage against a huge range of possibilities to simple policies specially created for small and medium industries. Here too, the guidance of your insurance agent will be invaluable in choosing what is right for you.

Postponing Coverage Is Unwise

Almost all states have mandatory data breach notifications requirements. This in itself can be hugely expensive. Additionally as the sophistication of the tools used to breach security becomes more sophisticated and the expenses involved become increasingly large, the risk is not something that a business can afford to carry on its own. Protecting your business with CLIC is essential.

The tribe of malicious hackers continues to grow and data breaches are becoming more common. Cyber security is essential, but it is often reactive rather than proactive. Hackers are intelligent and creative and are constantly finding new ways to penetrate security defenses. Major multinationals spend millions on protecting their data. However, they still suffer losses regularly, due to security breaches and this news hits the headlines.

Small and medium businesses may offer smaller rewards to criminals, but they are also easier targets because they do not have huge security budgets. Cyber risk insurance is no longer an option – it is essential for any business that stores sensitive data. The potential losses could destroy your business. If you are not covered or want to check if the protection you have is enough, contact your insurance broker who will be able to advise you on what you need to do.