Professional Liability Insurance for Small Business
Professional Liability Insurance is a type of insurance policy that protects policyholders from legal obligations to pay because of an error or omission in his professional work.
This type of insurance is also known as Errors and Omissions (E&O), and Malpractice insurance.
Acquiring a Professional Liability Insurance for small business owners that offer professional services is a must to lessen the cost of defense against lawsuits in the event that the firm committed errors that could harm other entities financially.
Businesses such as law firms, insurance agencies, real estate agencies, architects, or any other form of business professional services are prone to errors because they are mainly operated by people and not by machines thus making the chances of getting sued for professional liability higher. As an owner of this type of business, you should obtain an Errors and Omissions insurance to protect not only your employees but also the business’ goodwill as a whole. You should also shop around for trusted insurance companies, make sure that it has a good reputation and there no complaints regarding the services they offer. The following are examples wherein Professional Liability Insurance is most likely applicable:
- Shipping an order of a customer to the wrong address
- Selling inefficient software or bugged software which may affect the operations of the buyer.
- Malpractice in medical-related operations.
- Erroneous appraisals that resulted into financial loss in the part of the client.
After acquiring a Professional Liability Insurance the next thing an owner should do is to manage the risks of actually committing errors on the job. Another thing to make sure of is if a professional works for you, such an accountant, he should have his own professional liability insurance policy because some insurance company cancels a professional liability insurance if they find out that a licensed professional in your company doesn't carry his own professional liability policy. The following will reduce the company's exposure to errors and omissions to gain a good reputation:
Letting customers complain directly and immediately could prevent worse scenarios like being sued, this will also increase the satisfaction of the clients towards the services that the business is offering.
Never make promises that are almost impossible to fulfill by the business. One example is the delivery date of products which is not in total control of the business itself.
Minimize inefficiencies such as verbal commitments. These should be on paper records. Scanned and saved on a computer for reference. This will not only serve as the business’ record but might also save the business in the future in case of lawsuit against the owner.
Owning a Professional Liability insurance policy does not mean you should neglect your obligations. Instead, keep in mind that this insurance policy will only help you in case of lawsuits. It will not absolve you from it.
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