Q: What is Professional Liability Insurance and why do I need it? –Cautious Business Owner
A: Dear Cautious:
Business owners are probably aware they need liability insurance to shield their company from costly lawsuits. But not all liability insurance is the same, and it’s important to understand what types of coverage are available, so your business is adequately protected.
All businesses need General Liability Insurance, which covers lawsuits initiated by third parties (non-employees) for bodily injuries and property damage that are directly or indirectly related to your business.
Professional Liability Insurance, however, covers lawsuits alleging your professional services and/or advice caused a client to suffer financial losses, arising from actions like negligence, mistakes and omissions, and violation of contract.
And you can be sued even if the allegation is unfounded. All it takes is one unhappy client to sue you for “losses” they believe were incurred due to your work. Professional Liability Insurance ensures you won’t be responsible for legal expenses, regardless if they win the claim or not.
It’s often difficult to know if you need Professional Liability Insurance or just General Liability or even other types of insurance. A Creative Business Lawyer®, can help you choose the coverage that best protects your business from all possible risks.