Professional Liability
Do I Need Professional Liability Insurance?
Many people that never thought about purchasing professional liability insurance until recent years are beginning to seriously investigate whether they need a professional liability policy, also known as malpractice insurance and errors and omission insurance, to protect them for decisions they make on the job. Do you need this sort of protection? Let’s see.
- Do you have a state issued professional license? Then as a general rule of thumb it probably is good to have some sort of professional liability insurance, because you are selling services that the state considers on some level professional services.
- Do you run a business where you provide expert service that your clients cannot do and do not fully understand? For instance, engineers often purchase errors and omissions insurance, which is another form of professional liability insurance, and so do architects and contractors.
So, if you are running a business that provides expert services you probably do need some sort of professional liability insurance. It maybe called Medical Malpractice Insurance or errors and omission insurance or something else, but it needs to address mistakes, oversights, accidents, and other problems that could make your clients angry enough to sue you.
If you answered “Yes” to either question you should probably take a look at the more specific questions below.
1. Is your business physically dangerous in any way? There are a variety of kinds of liability, for instance economic liability, but none are more vital compared to the liability that occurs when a worker, customer, or, most inopportune of all, an innocent child is killed or maimed, as a result of actions of you or your employees.
In part, this is because of shock value that stories of maimed personnel or customers have in the news media, but also since the medical costs or worse survivor’s benefits are usually immensely expensive.
2. What size is your company? It may not be really sensible, however the larger your company the more insurance you may need comparable to smaller companies, because with far more activities there is, all other factors being equal, a much higher prospects for a tragedy. Also, a large, thriving business that appears to manage to pay a judgment is a much more desirable focus for litigation compared to a home-based business that has no other assets than a ‘68 Ford F-150 and pristine Tandy 1000.
3. Just how much is it possible to mitigate your financial risk without negatively impacting your core business? You should examine every task which you or your employees perform and see if you’re able to discover a less risky way for you to attain the same aim. Obviously, a handful of risks are intrinsic to certain business, for example fishermen always have to be concerned about drowning, and some alternatives are too expensive to actually put into practice, but sometimes you will discover a revolutionary idea that simultaneously reduces your liability and improves your production. A risk management consultant can help you search for these ideal alternatives, but make sure you select a risk management consultant with specific understanding of your industry.
4. How much insurance can you really afford? This is the basic issue of all insurance. No one can really afford to insure against all possible risk. How can you balance the competing needs of risk and the expense of protection? There is no simple answer to that question. Insurance companies will toss out numbers, and accountants, attorneys, and your favorite bartender might be worth asking for an opinion, but ultimately you must make a choice based on the best information you can.
5. How expensive are judgments in your business? This varies greatly from industry to industry and from state to state, but a good insurance agent can give you some direction.
There’s no perfect remedy. Well, unless you don’t have enough liability coverage when you want it. That’s the predicament.
Liability Insurance: It is Not Just For Frivolous Lawsuits
Obviously, doctors have needed professional liability insurance, commonly called medical malpractice insurance for decades, and in recent years, in an ironic twist of faith, nearly all attorneys have began purchasing Legal Malpractice Insurance, but many other professional still question the need for professional liability insurance.
However, modern day culture has bred a litigious society. People sue for everything and anything, It does not have to be your fault for you to get sued. You can read about frivolous lawsuits every day. Some of these cases are idiotic, many are obviously ignorant about the realities of running a business, and some are almost absurd, but no matter how baseless a lawsuit is on the merits if the court issues a judgment against your business you could be out thousands or even millions of dollars in a true judicial massacre.
You absolutely need liability insurance to protect you from those sorts of miscarriages of justice where your company was not in any way at fault, but, even more importantly, you need good well thought out liability coverage for those unhappy times when the incident it is your fault.
No one is perfect. This is a basic fact – not an excuse. Articles often discuss frivolous lawsuits, but truthfully that courts have gotten a lot tougher on frivolous lawsuits in the last forty years. Generally, frivolous lawsuits are no greater than a hassle.
What you ought to lose sleep about if you lack liability coverage is that day when everything that can go wrong does go wrong. That’s what happened on the Challenger and that what happened at the Little Big Horn and it can happen to your business. What’s the worst case scenario? Have you ever really thought about it?
Do you run a business where if one of your employees did not do their job correctly that a customer, or even worse a random citizen, could be maimed or even killed? How many times a day do your employees perform these possibly unsafe tasks?
If you lack liability coverage you are mindlessly trusting that those employees will operate precisely right each and every time? Do you trust your employees with that much responsibility?
Malpractice Insurance Quotes
There are a lot of different types of liability coverage and typically it is a specialty insurance that is designed to fulfill the specific needs of your business. However, your individual policy is developed from existing templates and there is no reason to start from scratch, because today if a risk can be insured against someone somewhere has most likely bought a policy to cover that risk. So, whichever company you buy your policy from will compare your company to other companies they cover and develop a policy or group of polices to handle the potential risks.
Due to liability insurance is not a one size fits all product it is even more important for you to shop around than it is for car insurance or health insurance. Be sure to get at least four or five quotes and be very careful about buying on price alone. Possibly the best approach is always to actually ask several insurance agents what risks they believe are most important in your given situation and compare the answers with your knowledge and what you are able to learn from other sources.
If you have read this far you should explore some of the links and articles. This site is a clearing house for information on professional liability insurance. Get the peace of mind that you need
Insurance Questions:
What is the cost of professional liability insurance independent doctor?
Location: California the services they offer non-expert / Deprivation of liberty only. The care receiver is my husband. long-term care policy, says I have a professional liability insurance “To protect the receiver of care of injuries because of the attention.” Both our names are on our homeowners policy housing – which has a policy of personal umbrella $ 2 M (apparently not enough)
personal umbrella, or owners, will not cover any activities business – including professional liability. So no matter what the limit is not covered. Moreover, as the two are secured by name, not cover one of you, if the other, of being sued (or possibly, if your partner dies, and his son / father / brother / legal action on the blood side of family with you by your partner’s assets), the homeowners and umbrella policy will not protect you. So think about that. What kind of medical leave have? If you do not have at least an LPN, we will not get the liability coverage. It is basically malpractice. If you do not have a license to practice, not you can buy insurance that covers you if you’re wrong. And also have to have general liability coverage (other coverage of companies). My guestimate on the cost of both is $ 2,500 a year, assuming that you are the sole employee.
Professional Liability Insurance: Why Do You Need It?