Did you know that annually around 40,000 deaths in Canada are attributed to medical malpractice? If you're a doctor, you need professional liability insurance to protect yourself if you're sued for malpractice.
However, professional liability insurance isn't just for doctors. Other professions need it as well.
If you want to protect your business, keep reading to find out more about professional liability insurance and how it protects you.
Who Is Professional Liability For?
If you're an accountant, lawyer, physician, or professional with expertise in a specific area, you need professional liability insurance. This insurance covers professionals against negligence and other claims that are made by their clients. Professional liability insurance is also sometimes called errors and omissions insurance.
General liability insurance policies are not enough for professionals due to the fact that they don't give protection against claims due to problems with a business or professional practice. Some claims include misrepresentation, negligence, or malpractice.
In some cases, for instance, doctors, your employer might provide professional liability insurance for you. In this instance, it's important that you understand what gets covered and for how much.
While the coverage might extend to you, its primary interest is the business it protects. You might want to consider purchasing a separate policy that covers you to ensure you are fully covered if something happens.
Professionals Who Run Their Own Businesses
Do you operate your own business? Professional liability does not get covered under your business policy. You need professional liability insurance and a business owner insurance policy.
As a professional, you're required to provide certain services at a particular level. However, if you don't, you can be held liable for the harm you caused to another person or business.
In-Home Business Owners
Even if you run your business out of your home, you will need to get professional liability insurance. You will also need an in-home business insurance policy.
Defining Liability
Liability insurance pays a third party, instead of the policy owner. If something happens in the course of performing your job as a professional that harms another business or person, you can be held liable.
This essentially means that you are responsible for the damage caused. Liability insurance will help cover costs associated with claims.
What Does Professional Liability Cover?
Professional liability protects your business when your client sues. However, it doesn't cover everything. It is important to know what it does cover before you purchase your policy.
There are a few key coverages here that are important to note.
Professional Negligence
When hired to perform certain tasks for your clients, you are expected to use reasonable care when providing services. Reasonable care means that you take into consideration the safety of yourself and others.
If you don't, you can get sued for professional negligence. There are a few factors that help determine negligence.
For example, what is the severity of the harm? Was a different course of action viable?
What was the cost of a different course of action? And, were there safer and less harmful options available?
If it can be proven that the services you provided fell below an acceptable standard for your profession, you're considered liable. There also needs to be a clear negative consequence.
This can include damages, financial losses, or injury to your client.
Misrepresentation
If you make a statement of fact that is untrue or misleading; you can get sued for misrepresentation. This typically occurs during negotiations with another party.
This can lead to them entering into a contract. If you do get found liable for misrepresentation, the contract can get dissolved, and in some instances, damages can be awarded.
Inaccurate Advice
Did you give inaccurate advice to a client that caused harm? For example, did you give financial advice that was inaccurate and resulted in your client losing money?
This is called inaccurate advice, and you can get sued for it.
Undelivered Services
Did you fail to deliver services in the way that was promised? If you don't deliver services to your client's expectations, you can get sued for undelivered services.
This is true especially if failing to deliver services as promised has a negative impact on your client or their business.
Missed Deadlines
Sometimes life happens and you are not able to deliver services by the date promised. Unfortunately, this can have a negative impact on your client, and they might incur extra expenses due to you missing your deadline.
If they sue because of this, professional liability insurance can protect you.
What Is Not Covered by Professional Liability Insurance?
Professional liability insurance covers what we listed above; however, it doesn't cover everything. For that reason, you'll need more than professional liability insurance to protect your business.
Bodily Injury or Property Damage
Professional liability insurance does not cover bodily injury or property damage. That means if your property gets damaged, or you get injured, you won't get covered by professional liability.
For bodily injury or property damage, you will need a commercial general liability insurance policy.
Did you or one of your employees suffer a work-related injury? This isn't covered by professional liability insurance.
For this reason, employers need to pay into a Workplace Safety and Insurance Board or WSIB payment plan. Rates for businesses are determined by a few different factors.
The money that is paid to the WSIB can be used towards paying injured or ill employees lost wages, healthcare, and more.
Data Breach
In 2020, 78 percent of Canadian businesses experienced at least one cyber attack. In a digital age, it's important that you protect your client's information.
However, sometimes breaches happen. If your business experiences a data breach, it is not covered by professional liability insurance.
However, you can purchase a cyber liability insurance plan. This will help cover financial losses caused by a data breach.
Criminal or Fraudulent Acts
If, during the course of conducting your business, you commit criminal or fraudulent acts, it will not be covered by professional liability insurance.
In this instance, you will get held responsible for the acts you committed.
Lawsuits Filed by Employees
If an employee files a lawsuit against you, it won't be covered under professional liability insurance. Employees could file claims for wrongful termination, discrimination, or a hostile work environment.
If this happens, how do you ensure that you are protected? For this type of claim, you will need to look at management liability insurance.
What to Look for in a Company that Offers Professional Liability Insurance
There are some things you should consider before you purchase a professional liability insurance policy. These factors will help you determine what company can best suit your needs.
Find a Reputable Company
You will want to find an insurance company that is fully licensed and has a good reputation. If you're unsure where to start, you can get quotes through Insurdinary for great insurance options.
You also want the company to be financially stable.
Consider Specialization
Some insurance companies specialize in certain types of insurance. They are often well known for that type of insurance, and while they might offer other types, it's not their specialty.
If you want to choose a company that can support you if a claim gets made, make sure that they have the knowledge you need. You might want to choose a company that specializes in insurance for businesses and professional liability insurance.
By doing so, you know you are choosing a company that can help you ensure that your needs as a business are met.
Read Reviews
As you're working to decide on an insurance company, make sure you read reviews. This will give you an idea of the struggles others may have had with the company.
At some point, every company is likely to get a bad review or two. However, you want to find a company that has more positive ratings than negative.
Customer Service
If you have to file a claim through your professional liability insurance company, you want a company that prioritizes customer service. You will have enough stress as you work to navigate what is happening with the claim.
Excellent customer service can help ease some of that stress.
Work with an Independent Agent
Working with an independent agent can not only make your experience feel more personal, but it can also help in other ways. For example, independent insurance agents will be aware of various discounts that might be available to you.
An independent insurance agent can also help you fully understand what gets covered and what doesn't.
Multi-Policy Bundling
We spent some time talking about other types of insurance you will need for your business. At times the amount of insurance you need can begin to feel overwhelming.
One of the best ways to address this is by arranging for all of your insurance policies to run through the same company. In addition, if you can find an insurance company that offers discounts if you have multiple policies, you can save money.
Coverage Amounts
What kind of coverage do you need? When it comes to choosing your policy, you want to choose the coverage that matches your level of risk.
If you're in a field where there are often lawsuits, you might need to purchase insurance with a higher limit.
Don't be afraid to increase your limit. Some insurance policies will have a limit of $1 million per instance, maxing at $3 million per year coverage. If you are in a high-risk field, this might not be enough. Increasing your coverage will increase your cost; however, ultimately, it will also protect you.
Ease of Use
If you do need to utilize your insurance, you want it to be as easy as possible. What is the claims handling process like?
Is it overly complicated and stressful? If so, you might want to go with another company. Essentially, you want a company that is knowledgeable and makes the claims process smooth.
In addition, when it comes to ease of use, consider payment methods. Can you automate payments?
Are payment options available online? If paperless billing and automated processes are important to you, consider this when choosing your insurance company.
Typical Costs of Professional Liability Insurance
When you go to choose your professional liability insurance, you don't want to assume that the cheapest policy is the best. Less expensive policies could mean that you have less coverage.
You always want to be sure to read your policy fully and understand not only what it covers, but how much it covers. The cost of your policy gets determined by the following factors:
- Business size
- Number of clients
- Potential costs if a claim goes to court
- If your industry gets regulated
- How common lawsuits are in your industry
- Length of time in business
- Past claims
- Location
Larger businesses will require a greater amount of coverage. Most coverage limits in Canada start at $1 million for a minimum.
However, if you are in a higher-risk field or have a bigger company, you might need a higher coverage limit. Your coverage limit will help to determine your costs.
Your cost can range from under $500 a year to a couple of thousand dollars a year when you take the above factors into consideration.
The Takeaway
Professional liability insurance helps to protect both you and your business. Make sure your business gets the coverage it needs so you can continue operating for years to come.
Are you ready to find out what your insurance will cost? Insurdinary wants to help you find the best insurance rates around.
Request quotes through us today.
