When you run a business, there are bound to be times when you come across disagreements. Many times, these disagreements are with clients who are unhappy with your work or who think they did not get what they paid for. You may also face issues with other businesses who have made claims against you for any number of reasons.

Business disagreements are not like personal ones. They can have major consequences to your business if you are sued or held liable for damages for something. If your business is not able to withstand those costs, then you may have to shut down or downsize. That’s why having a professional liability insurance policy is so important. It protects you from any claims made against you resulting from disagreements. Whether you are right or wrong, court costs can be astronomical, and you may face having to pay an award at the end. 

What is Professional Liability Insurance?

You might run your business very well. You have satisfied clients, and you’ve never had a complaint made against you or one of your employees. However, you never know when someone might take exception to your work. If you provide a service of some kind, there’s a very good chance that a customer will feel that your work was substandard and that they have suffered a loss of some kind. 

As an example, consider an appliance repair service. A restaurant needs their combi-oven repaired by a certain date for their grand re-opening. If you, as the repair person, are not able to meet that deadline and they are not able to reopen, they will suffer the loss of that potential revenue. At that point, they may choose to hold you liable for their losses and expect repayment or take you to court. Even if you have done nothing wrong, you can be taken to court as long as someone thinks that you did. Plus, the fact is that nobody is perfect, and mistakes can happen even with the most experienced and knowledgeable people. 

Professional liability insurance covers small businesses from the threat of mistakes, missed deadlines, cost overruns, incomplete work, breach of contract, and accusations of negligence. Again, remember that even if you have not done anything wrong, you can still get sued, and you will have to pay for court costs. This coverage will protect against that, as well as any rewards that you may have to pay at the end of the process. 

What Costs Can Professional Liability Insurance Cover?

Business disagreements that get to a certain point are not cheap. It can be incredibly expensive to resolve one. In fact, many businesses have had to close because of a simple mistake or an unavoidable missed deadline. To prevent this, you need to be protected against some of the more expensive aspects of resolving disputes if a claim has been brought against you. Professional liability insurance will cover you for your legal and defence costs if you are brought to court. It can also cover you for any damages you are required to pay to the business or client that suffered losses. Even if your business does not exist anymore when the claim is made, you could be covered through run off insurance to make sure that you are not personally held liable. 

How Do I Know If I Need It?

Professional liability insurance isn’t needed for every kind of business. However, if you provide a service of some kind, then it is a vital protection. For example, financial consultants can be held liable if their projections are not accurate and lead to bad advice for clients. Accountants could make a mistake in data entry or calculations which could lead to losses for clients. Architects may design something with flaws, or an engineer could miss a deadline, go over budget, or any number of things. 

Essentially, if you are providing a service and a mistake or missed deadline could lead to losses for a client, then you should get professional liability insurance. All of your clients may have been happy up to this point, but that can change in a heartbeat. Even if you are perfect at your job, which is unlikely, your employees could make errors which will lead to you holding the bag for any costs that ensue. 

Plus, some businesses are legally required to have this type of coverage in many states. Doctors and lawyers are most often required, since their business comes with so much risk involved. It’s important to check with your state to see if it is required for you. The object of these laws is to make sure that everyone is protected against financial harm if something goes awry. 

Won’t My General Liability Policy Cover This? 

General liability and professional liability are two different types of coverage that protect against different things. General liability will protect against claims from someone who has suffered an injury or property damage due to negligence. This could be from slips and falls, or exposed wiring, or any number of things on your property. It will also protect against claims of libel, slander, and reputational harm. Professional liability will protect against any mistakes you or your employees make while providing a service. 

Is the Cost of Getting Coverage Worth the Potential Cost of a Business Disagreement?

How much you pay for your policy will depend on several factors. Different types of businesses have different risks. You may also pay more if you have more employees, or if you have a history of claims made against you. In fact, your professional liability coverage may be expensive for you. However, any cost you pay for this insurance will pale in comparison to the cost of legal fees, court costs, and rewards that you will have to pay if someone makes a claim against you. Plus, there are the non-financial costs of business disagreements. You need to be able to rest your head at night knowing that your business or you personally will not be financially sunk because of a slight miscalculation or an improperly hammered nail. 

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