Do Small Businesses Need Professional Liability Insurance? 

If your business provides advice, services or expertise to clients, professional liability insurance, also called errors and omissions (E&O) coverage, is an essential investment. This type of policy can respond when a client claims your work caused them financial harm. Even if you did nothing wrong, a well-documented, competent professional can face a lawsuit, and defending against one without coverage can drain resources quickly.

Who Needs Professional Liability Coverage

This coverage applies broadly, not only to large firms or licensed professionals. You may benefit from a professional liability policy if you work in fields such as:

• Consulting or business advising
• Marketing, design or communications
• Technology services or software development
• Accounting or bookkeeping
• Real estate, staging, or property management
• Healthcare or wellness services

If a client can claim your work, advice or oversight caused them a financial loss, professional liability exposure exists.

What the Coverage Actually Does

Professional liability insurance helps cover legal defense costs, settlements and judgments arising from claims of negligence, errors, missed deadlines or failure to deliver promised services. It does not typically cover bodily injury or property damage, which fall under general liability. In many cases, clients and other parties may require proof of coverage before agreeing to work with you.

How Premiums Are Determined

When determining rates, insurers look at various criteria, including your industry, the types of services you provide, your revenue, your claims history and the coverage limits you select. By working with an independent agent, you can peruse the offerings of many carriers and potentially find the best available price point.

Find the Right Coverage

Contact PolicyChex Inc. to explore available policies or review your current coverage and make sure you have the right policy to account for possible professional liability claims.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.