Understanding general liability vs professional liability insurance coverage is necessary to the success of any business. Having a general liability policy in place will protect you from the issues that can be qualified.
This would include someone injuring themselves on your property or a car driving through the front of your business. Professional liability, on the other hand, protects you from the more subjective issues that can nevertheless plague your business. Regardless of the type, expect enormous growth in the next five years as business owners grapple with how to mitigate their risks.
Defining Professional Liability
Errors and omissions, or E&O, is often used interchangeably with professional liability insurance because it offers such a clear example of the type of liability that businesses face in this regard. Think of a financial advisor who forgets to sell a client’s stock when told to do so.
There is clear damage incurred, but it can be hard to quantify. Now that we understand that, here are the five reasons you should go ahead and invest in professional liability insurance today.
1. Protect Against Lawsuits
Professional liability insurance can protect your firm in the event of a lawsuit. That’s not just shielding you from financial damages but also from the costs of defending cases and losing revenue from lost work.
2. Meet Client Expectations
Professional liability insurance is often included as mandatory in contracts between business owners and clients because it’s mutually beneficial. In other words, it saves your clients money, too, because they will not have to search far and wide for peace of mind, and they will be able to avoid costly litigation as well.
3. Safeguard Assets and Investments
Another area where you protect your business with professional liability coverage is through whatever assets and investments that you own. Rather than having to liquidate financial accounts to pay damages, you can rely on your coverage to protect you while holding onto your equity.
4. Help Future Financing
Something that businesses don’t often think about when searching where to get liability insurance is how obtaining such a policy can help them grow their business. In the lifespan of any growth-oriented business, there will come a time where more growth capital is needed than the company has access to.
During these times, a loan, line-of-credit, or an investment from outside might become necessary. Many lenders won’t loosen their pursestrings unless professional liability coverage is in place. For those who do, terms might not be as favorable because the perception is they’re taking on more risk.
5. Fill Gaps in Coverage
Jasdeep Singh, COO of 3BC, notes that another positive aspect of professional liability coverage is how it can fill in liability gaps that general insurance does not cover or when a business has let its business insurance lapse. Professional liability policies, Singh notes, can be picked up relatively quickly and protect the business before entering into their next contract.
Professional Liability Offers Peace of Mind
More than anything, professional liability coverage gives the policyholder peace of mind. They feel protected because of the safety net it offers in times of litigation. It safeguards what they have, helps with future growth, and fills in where other coverage is lacking.
Consider adding a professional liability policy by comparing rates and going with the best offer for you. Best of luck. For more business tips, check out some of our additional posts!