What is Professional Liability Insurance?

What is Professional Liability Insurance?

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If you are a professional that may be in the place of giving advice or a service that could cost someone a large amount of money then you may need professional liability insurance. This insurance helps professions needing this coverage and is not the same as general liability insurance. You need to look at your policy to ensure that you know what is covered and what is not covered. If you think that you have coverage that you do not have, you may be leaving yourself wide open to have claims filed against you and your business.

The Basics

Professional liability insurance is also known as errors and omissions insurance, or E and O insurance. This coverage will allow you to be protected in case an actual or an alleged claim comes against you. Claims are made because of errors or omissions that you may have made in one of your professional services.

Your policy will generally cover the actual or alleged negligence of you or your firm. Typically negligence is failure to meet the standard of care for your industry. There are cases that contracts have been drawn up in such a way that makes it much easier for people to make a claim against you. If you have professional liability insurance you can ask the company that you have your coverage through to look over the contract before you sign anything. This company does not want to pay out money anymore than you do so they will make sure that the contract is in your best interest.

Putting Out Money

It is true that this type of insurance can be considerably expensive. Many times people are shocked whenever they see the prices. The most common fee for this type of insurance is one to two percent of the business revenue. Sometimes the premiums are even more expensive. It is important that you pay close attention and look over the policy before you decide to go with a certain company.

Whenever you compare different companies you will be able to get a better price. You should not compromise the amount of coverage you will be able to get, however. Saving a little bit of money upfront but then having to pay out a great amount of money because you did not get adequate coverage is not going to be helpful. Make sure that you look at the balance and get good value whenever you purchase coverage.

One important thing that you need to remember whenever you go to file a claim on your insurance is that the claim must come before the retroactive date. This retroactive date is generally whenever you actually bought the insurance. If the problem happened after you were insured then you will be able to make a claim in most cases. If you had prior knowledge about a possible claim then you may not be able to get compensated.

Since every business and every policy is different it is very important that you speak with a professional who will be able to answer your questions. Having a list of questions written out in front of you will enable you to have a more profitable conversation and get all of the important questions asked. If you leave out a question you may cost yourself thousands of dollars.

Protecting yourself and your company is easy whenever you have a good insurance policy. The comfort and peace of mind that you get will enable you to operate your business more effectively. There are plenty of professions that need this type of insurance so make sure to check if your profession is one of them.