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.

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