What is professional liability insurance?
Professional liability insurance (aka errors and omissions insurance or E&O insurance) is insurance that protects you in the event that a client claims your business was negligent, made a mistake, or failed to deliver a promised service. In other words, it’s protection against an unsatisfied client.
Who needs professional liability insurance?
If you get paid for providing services or expert advice to clients, E&O insurance is probably something you’ll need. If something goes wrong on one of your projects, it could quickly result in a lawsuit against your business. Even if you’re technically not at fault.
Why do you need it?
Lincoln once said, “You can please some of the people all of the time, you can please all of the people some of the time, but you can’t please all of the people all of the time.”
The same goes for the clients you work with. It’s important to deliver your best work but it’s equally important to have asset and integrity protection when it comes to your business, as well as defense and damage coverage should you get sued.
Cost coverages include getting an attorney, judgements and settlements, and miscellaneous court costs.
How much does professional liability insurance cost?
On average, low-risk businesses can expect to pay somewhere around $600 a year. However, the cost of professional liability insurance can vary based on the following factors:
The kind of work you do
For example, someone working in technology has a higher risk of monetary loss than a data entry professional.
Where you live
Insurance rates vary by state, and some are more expensive than others.
The number of claims your industry has filed
If the people in your industry haven’t filed many claims, the insurance company will price risks lower due to good performance.