Protecting your business and your assets is important. If you are not properly protected, you may find yourself in ruins. Having proper insurance will allow you to keep yourself out of trouble and your business in the black.
What This Insurance Policy Covers
While each policy may be worded differently and could provide a slightly different type of coverage, there are some basics to professional liability insurance. This insurance is in place to protect in case of a lawsuit against you from a client. The lawsuits you are protected from through this insurance are for how you fulfilled or did not fulfill your professional obligations to the client. You may also have heard this insurance called errors and omissions.
Some people think that general liability insurance is enough to cover their business, but this is not true. General liability insurance only covers you if you are sued because you have caused your client financial loss or caused their services to be interrupted. If you are sued for something other than this, it is important that you get professional liability insurance.
When to Purchase
Since professional liability insurance can be considerably expensive, you may be trying to hold off on getting this insurance. Before you do any job, you should have this insurance in place. You may not have any problems for years, but then again, you may have a problem in the beginning. Having this coverage in place right away will ensure that you do not ruin yourself before you are even able to get started.
There are many companies that require independent contractors to have professional liability insurance before they will agree on a contract. If you are not covered, you may miss out on business. Missing out on business can cost a great amount of money for you. The premiums that you have to your insurance company are a business expense so make sure that you do not let the cost of the premiums stop you from getting the coverage that you need.
Once you have decided you want to purchase coverage, you may not be sure about how much coverage you need. There are a few different factors you can look at to decide how much coverage you need. One of those is how risky the job you are doing is. Someone that is dealing with million dollar projects will not need the same amount of coverage as someone that is dealing with thousand dollar projects.
Before you purchase your policy, you also need to make sure that you check how much your premium is going to be for that amount of insurance. Even though you are going to be able to take this amount off of your taxes, if it is not in the budget and available for spending, you may have to lower the amount of insurance that you get. Making sure that you get the right amount is always important.
To be covered for a lawsuit, your insurance must be in effect at the time of the lawsuit and remain in effect. If you fail to pay your premiums and your policy lapses, you will not be covered. If you did not start your coverage until after the lawsuit, you will not be covered.
Having professional liability insurance as soon possible is wise. Make sure you do not forget to get your coverage before you work your first job. Being covered will allow you to work with peace of mind. You will be able to provide a great service, but in case there is an error or omission, you will be covered.