Professional Liability Insurance: How to Apply for Professional Liability Insurance

Are you wondering if Professional Liability Insurance is necessary? Sure, it is. You must understand that providing professional services opens businesses up to risks. What if you make a mistake or face an allegation of negligence from a client? Errors happen, but professional liability insurance can protect your company when they do.

Professional Liability Insurance: How to Apply for Professional Liability Insurance

Let’s take a closer look at what professional liability (or errors and omissions) insurance covers, who needs it, what it costs, and where to buy the best policy for your business.

What Does Professional Liability Insurance Cover?

Professional liability insurance kicks in when a client claims your business made a mistake, failed to deliver on promised services, or provided negligent advice. For instance:

  • An architect designs an office building that later is found not to comply with disability access laws – the client sues for negligence in failing to meet industry standards.
  • An IT consultant doesn’t finish a security upgrade project on time. Afterwards, the client company experiences a data breach and alleges the consultant is liable for delays in securing their systems.
  • An insurance agency promises claims support in client contracts but ends up understaffed and unable to provide adequate assistance when needed. Clients sue for breach of contract.

Essentially, professional liability insurance can cover legal fees, court costs, settlements, and judgements when clients allege errors, omissions, negligence, or failure to deliver services as promised. The policy pays out whether claims have merit or not.

What’s not covered? Bodily injuries, property damage, employee disputes, or criminal actions. For those risks, businesses need general liability, employment practices liability, and other policies.

Now, who needs professional liability insurance?

Businesses That Should Consider Professional Liability Insurance

If your business earns money providing expertise or services to clients, buying professional liability insurance could save you from financial ruin in case of a lawsuit.

Industries that commonly carry professional liability insurance include:

  • Consultants (IT, management, HR, more)
  • Accountants
  • Architects
  • Engineers
  • Financial advisors
  • Insurance agents
  • Lawyers
  • Real estate agents
  • Programmers
  • Designers

Plus healthcare practitioners like doctors, nurses, dentists, and mental health professionals. They often call their professional liability coverage “medical malpractice insurance” since it protects specifically against claims of medical errors harming patients.

Some professions actually require proof of professional liability coverage through state licensing boards or trade associations. Lawyers and medical professionals commonly face mandatory minimum amounts of coverage.

Alright, so what does this specialty insurance cost?

Professional Liability Insurance Costs

Professional liability insurance rates vary dramatically based on profession, location, years in business, past claims, and other factors.

That said, Insureon finds the average small business pays about $59 per month for a policy. To compare, Progressive’s customers pay a median $42 monthly.

When requesting quotes, expect pricing to depend on:

  • Industry and risk of lawsuits
  • State and region where you operate
  • Years in business
  • Number of employees
  • Past claims history
  • Amount of coverage requested

We’ll dig into finding the best coverage options next.

Shopping for Professional Liability Insurance Options

Most major commercial insurers sell professional liability coverage. But for the lowest premiums and best fit, it pays to compare quotes from multiple providers.

As you shop, think about:

Where you operate – Hiscox covers overseas work, unlike some competitors.

Existing policies – The Hartford offers professional liability endorsements for businesses with BOPs.

Convenience – BiBERK focuses on easy online quotes and purchases.

Here are four top professional liability insurance picks:

Chubb 

Best For: Overall coverage from a financially strong insurer.

Highlights: A+ rating for financial strength from A.M. Best. Streamlined online quotes and buying.

Consider If: You want reputable coverage without hassle.

The Hartford

Best For: Adding to existing business insurance packages.

Highlights: Ability to endorse professional liability onto BOPs.

Consider If: You have other policies with The Hartford already.

biBERK

Best For: Buying conveniently online.

Highlights: Berkshire Hathaway-backed carrier with easy online quotes.

Consider If: You value a fast, fully-digital insurance shopping experience.

Hiscox

Best For: International professional services firms.

Highlights: Covers U.S.-based claims from overseas work.

Consider If: You frequently work with foreign-based clients.

How to Apply for Professional Liability Insurance

The application process varies between insurers but often includes:

  • Completing an application with details on your experience, services, clients, and more.
  • Providing financial statements to give the carrier insight into your business stability.
  • Listing projects and contracts you’re delivering on presently.
  • Ordering risk management reports if you operate in a very litigious field.

Brokers can help gather and prepare these supporting documents. Though the easiest way to buy for many businesses is through a streamlined digital quote-and-buy process. This lets you compare, quote, and secure optimal coverage fast without paperwork hassles.

Do You want to Apply for Professional Liability Insurance?

Since purchasing professional liability insurance to protect your business is important. Here is a straightforward process to go through when applying for a policy:

Determine Your Risk Profile

The first step is to honestly evaluate the services you provide and the chances of being sued for an error or omission. High risk professions like medical, legal, financial advising, and consulting generally have higher premiums. Be ready to explain details of your profession’s inherent risks.

Research Reputable Providers

Use resources like industry associations to find insurers familiar with your field. Look for financially strong carriers with experience covering your occupation. A broker can suggest suitable options too.

Gather Necessary Information

Insurers will request supporting documentation like:

  • Revenue statements -Professional certifications/licensing
  • Current projects
  • Standard contracts
  • Past liability situations

Having this paperwork ready speeds application processing.

Complete Applications Thoroughly

Applications require extensive professional details:

  • Services offered
  • Types of clients
  • Years of experience
  • Staff qualifications
  • Quality control measures

Accuracy and transparency is crucial here. Any missing or erroneous information could negate future claims.

Obtain Multiple Quotes

Each insurer assesses risk differently, so get proposals from at least three. This allows cost comparisons and better understanding typical coverage ranges or options in your industry.

Read the Policy Thoroughly

Carefully review policies before binding, especially:

  • Claim procedures
  • Exclusions
  • Coverage limitations
  • Deductibles

Ask questions to clarify any vague legal language upfront.

Report New Contracts

Notify your insurer when taking on new clients or projects so they can evaluate additional exposures and adjust your policy values accordingly each year.

Following these steps when initially getting insured helps secure protection that truly fits your practice. And sticking to sound risk management basics allows coverage to renew smoothly year after year.

Conclusion

Mistakes happen, but allegations of professional errors can sink unprepared businesses without warning. Rather than leave things to chance, invest in professional liability insurance matched to your profession’s risks and regulations.

Having coverage gives you confidence to deliver expertise and services to paying clientele, knowing your personal and business assets have financial protection if unexpected claims arise. And you can fight back against unjust allegations rather than surrendering immediately due to legal costs.

So, reach out for quotes today, ask about industry-specific recommendations from qualified small commercial agents, and review options with an eye toward defending your company’s good name while managing premium expenses. Then you can focus on fueling operations, not worrying over what-ifs.

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