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Professional Liability

Professional Liability, Errors And Omissions Coverage For Small Businesses

B2Z Offers Professional Liability

Professional liability insurance is an optional coverage (also referred to as "errors and omissions insurance” or “professional indemnity insurance”) to consider for your small business—especially if it provides consulting or expertise to clients. Do you need this coverage for your small business? What does professional liability insurance typically cover or not cover? We’ve done the research for you below.

What You Need to Know About Professional Liability

  1. Q
    What is Professional Liability?
    A

    Professional liability insurance protects businesses that provide expertise and consulting services—such as accountants, barbers and beauticians, and computer consultants—from costs resulting from work mistakes, missed deadlines, professional negligence lawsuits (among others).

  2. Q
    Why do I need Professional Liability for my small business?
    A

    Professional liability coverage is designed to ease the financial burden of claims of negligence or injury made about the professional services or advice provided by your small business. Whether you are at fault or not, this coverage may provide financial relief for related losses, attorney fees, and court costs.

  3. Q
    How does Professional Liability work?
    A

    Simply stated: You pay premiums (on behalf of your small business), monthly or annually, and based on your coverage selections and business details. In exchange, the insurance company agrees to pay claims and associated expenses covered by the policy. Your policy documents are the legal contract between your small business and the insurance company.

  4. Q
    What does a Professional Liability typically cover?
    A

    Professional liability coverage expenses related to customer claims made against the professional services or advice provided by your company, such as: negligence, inaccurate professional advice, personal injury, and related legal costs.

  5. Q
    What doesn’t a Professional Liability typically cover?
    A

    Typically, a professional liability policy does not cover the following: criminal acts, employment claims, false advertising, copyright or trademark infringement, and regular claims not related to your expertise.

Because You Can Never Have TMI (Too Much Information)

When It Comes to Insurance Your small business has unique risks, and understanding those risks is key to finding comprehensive insurance coverage. Do you provide professional expertise or consulting services to your customers? If so, professional liability insurance was designed for claims arising from those services rendered. Learn more below.

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A few reasons to consider professional liability insurance for your small business. 

Keep in mind these statistics relate to small businesses that provide expertise and consulting services to customers:

Services Employment. More than 71% of private employees (or 107.8 million people) work in the service businesses.

Lawsuit Frequency. 43% of small businesses reported having been threatened with a lawsuit; and in general, each year 36-53% of small businesses are sued.

Contract Breaches. 31.4% of small businesses have faced a breach of contract lawsuit, which is the most common lawsuit faced by small businesses.

Negligence Costs. $182 billion is the collective cost bore by small businesses each for negligence (tort) lawsuits. 39% of those businesses reported an annual revenue of under $1 million.

Costly Settlements. 90% of small businesses opt to settle lawsuits simply to avoid higher court costs with out-of-pocket settlements wildly ranging from $3,000 to upwards of $100,000.

Industry Requirement. In order to operate within certain industries or states, or as a contract specification, Professional Liability coverage may be a requirement.

 

What’s Typically Covered by a Professional Liability

Professional liability typically covers expenses related to customer claims made against the professional services or advice provided by your company.

  • Actual or alleged mistakes or negligence
  • Inaccurate professional advice
  • Personal injury, such as libel or slander
  • Claims against temporary staff and independent contractors
  • Related legal costs

 

What’s Isn’t Typically Covered by a Professional Liability

Professional liability doesn’t typically cover:

  • Fraudulent, dishonest, or criminal act
  • Employment practices
  • False advertising
  • Copyright, patent, or trademark infringement
  • Claims unrelated to your expertise (typically covered by BOP)