Businesses That Need Professional Liability Insurance

Professional liability insurance can offer protection to a variety of business professionals, especially those who sell some kind of service to clients. Depending on the industry, professional liability insurance may have a variety of different names. However, it offers the same general protection to all. If you’re a business professional, particularly one in the industries mentioned below, it may be time to contact an insurance professional if you don’t already have professional liability insurance.  

Businesses That Definitely Need Professional Liability Insurance

Professional liability insurance — also called Errors and Omissions insurance — protects professionals from claims of negligence that may be made by their clients. Professionals within a multitude of service industries need this type of insurance because general liability insurance doesn’t offer coverage when it comes to claims that arise from negligence, malpractice or misrepresentation. This is where professional liability insurance comes into the picture, filling this hole in your liability insurance protection. 

If you work in any of the industries listed below and you don’t have a professional liability insurance policy, you could be putting your business at risk in the event of a lawsuit. 

1. Real Estate Offices

Many different issues can arise during the sale or purchase of property, such as missed disclaimers, negligent misrepresentations, alleged failure to reveal defects and many more. By having professional liability insurance, real estate offices can get the coverage they need to protect them from unhappy customers from claiming that their agent misrepresented the home that they purchased. 

A real estate transaction can be one of the most significant financial investments people make in their entire lives. When combined with stress, it’s easy to see how a legitimate and honest real estate transaction can ignite a claim of negligence. 

For example, imagine that you are selling a property that’s advertised as having a lakefront view. Between the time that you showed the client the home and the time when the client closes on their mortgage, the neighbor plants a tree on their property that partially obscures the view of the lake. Despite the fact that you have no control over the actions that take place on the property next door, an angry client could still potentially sue you or your real estate office for misrepresenting the property. If you don’t have professional liability insurance, you’d be left covering all of your own legal fees out of pocket.

Whether it’s buyer’s remorse or claims of wrongful discrimination, real estate is an industry with so much face-to-face interaction with clients that it’s not uncommon for issues to arise. With professional liability insurance, real estate offices can gain some peace of mind knowing the business isn’t entirely at risk if a client does decide to take them to court. 

2. Law Firms

Similar to real estate agents, lawyers create personal relationships with clients and engage in a lot of face-to-face interaction with many different people involved in each unique case. Even if your law firm works hard to keep the highest standard of professionalism, sometimes a client may be disappointed in the work you provided them. 

Professional liability insurance helps to protect law firms from financial troubles in the event that claims of negligence are made against them and a client sues. This type of insurance not only helps pay for costs to defend against these lawsuits, but it can also help with judgments or settlements that result from mistakes. 

Malpractice lawsuits are fairly common, often because of delayed paperwork or paperwork that was misfiled. In a busy law office, some mistakes are bound to happen. Even something as simple as failure to follow a client’s instructions can end in a malpractice lawsuit. This is where professional liability insurance can aid you and your firm. 

3. Doctor’s Offices

Doctors offer healthcare and assistance to those in need, but that doesn’t mean they escape the possibility of being sued. Professional liability insurance, often referred to as malpractice insurance within the healthcare industry, can help in the case that a client or patient receives some form of service that they are unsatisfied with and that they claim resulted from negligence. Whether it’s because of alleged poor advice, an incorrect diagnosis, a mistake or lack of oversight, professional liability can help cover your legal expenses.  

4. Accounting and Financial Advice Firms

Accountants and other financial professionals offer their clients financial advice, and clients who hire these firms for their household or business take their finances very seriously. Whether a client is angry that an investment didn’t go their way or you offered inaccurate financial recommendations, your accounting or financial advice firm is at risk every single day it conducts business. 

Professional liability insurance offers risk control so you can conduct business as usual without worrying about losing everything if a client sues or a mistake is made by someone at the firm. It also offers protection of assets and protects the firm’s partners from financial disaster, which is pertinent if you’re a partner of the firm. 

Even if your firm is a low-risk firm and only handles taxes or limits services to clients you’ve known for years, there’s unfortunately no avoiding the risk that comes from providing personal services associated with accounting and financial services. Even if you win the lawsuit, fighting against any type of claim will cost the firm a significant amount of money. Professional liability insurance helps to cover the cost of claims made against your professional advice, whether the lawsuit is warranted or not.    

5. Travel Agencies

Travel agents assist their clients with booking anything related to travel, including lodging, transportation or entertainment. If the client ends up being unhappy with the services you provided, the agency could be at risk of a lawsuit.

Professional liability insurance or errors and omissions insurance offers coverage for defense costs and negligence claims. Even something as simple and out of your control as a flight being delayed could result in the client suing you. Many issues can arise that are entirely out of your control and can result in a lawsuit, which is why it’s important for travel agents to protect themselves with insurance. 

With professional liability insurance, the travel agency doesn't need to worry about a financial disaster because the policy can cover costs and aid throughout the legal process. Even if you actually did make a mistake and a judge orders a settlement to your former client, your policy can help pay it.   

What Does Professional Liability Insurance Cover?

Professional liability insurance offers general coverage to all business owners who purchase it as well as industry-specific protections should you need them. The most common items that are covered under these types of policies include protection from claims of negligence or mistakes, misrepresentation, missed deadlines and inaccurate advice. 

You can also purchase excess liability coverage that extends the limitations of your policy, covering larger financial needs. Excess liability coverage can be an essential protection for anyone who deals with high-value clients or expensive services. 

Types of Professionals Who Should Carry Professional Liability Insurance

Everyone who offers professional services and advice to clients in exchange for money needs some form of professional liability insurance. Remember that even if you have general liability insurance, it will not cover lawsuits that arise from claims of misrepresentation or negligence. This means that you’ll need to invest in a separate policy when purchasing professional liability insurance even if you have a comprehensive business owner’s policy. 

However, certain professionals who are more at risk than others and should not forgo this type of insurance. Attorneys, doctors, insurance agents, accountants, financial professionals, brokers and real estate agents should all have comprehensive professional liability insurance. Depending on your business and the state you operate in, you may be required to carry professional liability insurance by law if you work in a high-risk field. For example, if you operate a doctor’s office in Kansas, you are legally required to carry at least $200,000 worth of professional liability insurance per claim. Even if this coverage isn’t required by law for your business, you should still consider it if your business offers services or advice. 

How Much Coverage Do You Need for Professional Liability?

The amount of professional liability coverage you need is dependent on a few different factors, including the industry you’re in, the size of your business and the location of your business. You’ll want to get enough coverage for all the possible risks of your industry and for all the people that work for or with you if you own the business. Before purchasing a policy, consult with an insurance professional to learn about legal requirements in your area and how much liability insurance you need based on your unique business. 

Compare Professional Liability Insurance Policies

Benzinga offers insights and reviews on the following professional liability insurance policy providers. Consider beginning your search with a few of the links below. 

Importance of Professional Liability Insurance for Businesses

By investing in professional liability insurance, businesses can safeguard their financial stability, protect their reputation, and mitigate potential legal risks. It not only provides a layer of protection for businesses and their clients but also signals professionalism and reliability to potential customers. In an unpredictable and litigious business environment, professional liability insurance is an essential safeguard that no business can afford to overlook.

Frequently Asked Questions