Owning a small business is a great accomplishment. It takes great amount of effort and hard work to get it started and keep it functional and profitable. However, a small business owner’s hard work and efforts can all be taken away in the blink of an eye. All it takes is one accident or mistake that results in a lawsuit and everything can be lost. The best way for a business owner to be protected from the financial devastation a lawsuit can bring is to be protected by a professional liability insurance policy. Following are several of the benefits of professional liability insurance for small businesses.
When does professional liability insurance kick in?
Professional liability insurance goes into effect and covers the legal costs incurred by a small business when a customer or client claims that the business’ services caused a financial loss. There are several instances when professional liability insurance can help offset potential financial losses. One is alleged failure to provide certain services as promised. Another is negligence in performing professional services. Clients may indicate they were the recipients of shady, incompetent or incorrect work or that mistakes and oversights were made. Even if the above claims are found to be without merit, professional liability insurance will pay for the business’ legal defense. If the business is found to have fault in the manner, the insurance will cover settlement costs as well.
Professional liability insurance protects a small business from the unknown
Simple day-to-day operations of a small business can put it at risk. Accidents can happen quickly and without any previous indication. Small businesses that do not have professional liability insurance can end up experiencing financial devastation when they are unprepared for these possible circumstances. Professional liability insurance can help a small business cover unforeseen expenses due to medical bills that are incurred by employees or customers while on the business’ premises. It can also help pay for legal fees and damages that the company is responsible for covering.
What does professional liability insurance cover?
Professional liability insurance can protect a small business against many unfortunate circumstances. Some instances that are covered by professional liability insurance include the misrepresentation, negligence and inaccurate advice as well as violation of fair dealing and lack of good faith.
Carrying professional liability insurance shows a high level of professionalism
When a small business carries professional liability insurance, it sends a message of professionalism to its clients and customers. Having insurance lets them know that the business is capable of backing up the quality of their work. Further, if a small business can provide proof of insurance coverage, it can set it apart from other businesses that a customer might do business with. As a result, having a professional liability insurance policy can easily be the difference between winning business or having it walk out the door.
Having professional liability insurance will save a small business money
Lawsuits can be expensive. Having a professional liability policy in place will ensure a small business does not have to pay the expenses of a lawsuit out of its pocket. Also, carefully training employees about proper techniques can minimize the likelihood of claims that are made, which can result in lower insurance premium costs over time. For example, on-the-job training and continuing education courses are often worth the investment. These educational programs can reduce or eliminate errors that could be made by employees. They also give a small business a greater edge in a competitive marketplace.
Why choose professional liability insurance over errors and omissions coverage?
Many small business owners think that having errors and omissions coverage is sufficient, but that is not necessarily the best course of action. Errors and omissions insurance is designed to protect businesses from mistakes that are made by the company. It is not all-encompassing coverage that will cover the small business for larger issues that can become extremely costly. Typically, professional liability insurance is more expansive and covers a wider range of issues. Thus, it provides a wider scope of coverage for a small business. This can provide necessary relief in the face of adversity and help a small business stay afloat during dire circumstances.
Small businesses are at a great risk of financial devastation due to lawsuits. Even if there is a successful outcome, lawsuits still have major costs associated with them. Small business owners can protect themselves from the damage that can occur when unforeseen accidents or other mistakes occur by having adequate professional liability insurance in place. Small business owners and managers should consult with a reputable insurance agent to determine the right level of coverage for their enterprises. Investing in business insurance today can help prevent financial devastation in the future.
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