Who Needs Professional Liability Insurance? A Guide for Service-Based Businesses

As a professional service provider, you need to protect yourself from unwanted claims where a client alleges that you didn’t do your job professionally. This can be either an error or an omission that leads to financial loss for the client. Professional liability insurance is how you protect yourself from these types of claims by providing the financial resources to cover losses and legal fees. 

Importance of Professional Liability Insurance in a Modern Professional Landscape

Professional service providers need professional liability insurance to cover unexpected claims where a client says they experienced financial loss due to your professional advice or work. Every service provider is at risk for this type of loss simply because accidents happen and humans make mistakes. Even the most professional people are not immune to errors. And these claims can be costly if you don’t have professional liability insurance to protect you. 

Who Needs Professional Liability Insurance?

Professional liability covers what general liability doesn’t. Let’s take a closer look at what professional service providers need professional liability insurance. 

Medical Professionals

Medical professionals need what is called malpractice insurance which is the name for medical professional liability insurance. While anyone in the medical field can be at ris,k including nurses and support staff, the majority of service providers needing the policy include: 

• Doctors and surgeons
• Dentists
• Psychiatrists and Psychologists
• Physical therapists

Legal Professionals

Legal professionals often find themselves in claims for advice given since the field is particularly litigious. Those who need professional liability insurance include:

• Lawyers
• Attorneys
• Paralegals

Financial Services

Financial services providers may be in a claim for professional liability because they set expectations unrealistically for growth or made an error on an accounting report. Those who need professional liability insurance in the industry include: 

• Accountants
• Auditors
• Financial advisors

Real Estate and Property Management

Real estate agents and property managers are at risk of being sued for misrepresentations about a property. If those misrepresentations lead to financial loss, there may be a professional liability insurance policy claim. Those in the industry who need a policy are:

• Real estate agents
• Real estate brokers

Consulting Services

Consultants don’t always think about getting professional liability insurance. However, this is an important piece of their insurance portfolio. Those who need it include: 

• IT consultants
• Tech firms
• Business consultants

Creative and Media Professionals

Creative and media professionals are another group that benefit from having a professional liability insurance policy to deal with claims of financial loss. In partiuclar, the following should have a policy:

• Graphic designers
• Marketing professionals
• Advertising professionals
• Photographers
• Videographers

Architects and Engineers

Another group of professionals who need professional liability insurance includes: 

• Architects
• Engineers
• Construction professionals

Educators and Trainers

Educators can be liable if they misrepresent what a student can do and accomplish. Those who need professional liability insurance include:

• Professors
• Teachers
• Tutors

Non-Profit Organizations

Non-profit organizations should protect their directors and officers from liability with a specialized policy known as a Director & Officers insurance for non-profit businesses. This absorbs the liability of directors and officers from making innocent mistakes while running the organization. 

Why Professional Liability Insurance is Essential

Professional liability insurance is important for several reasons.

Protection Against Legal Costs

A professional liability insurance policy affords a policyholder to have a legal team defend them during a claim against their business. The insurane company provides the legal counsel and absorbs the cost that can be substantial if litigated. 

Safeguarding Professional Reputation

Having a professional liability insurance policy helps a service professional protect his business reputation. Having a policy is part of being a professional and goes a long way to attracting new clients and contracts. 

Client Contractual Requirements

While a service professional business should have a contract to ensure all parties know what is expected of them, the professional liability insurance policy protects service providers from contract disputes that may occur. 

Factors to Consider When Choosing Professional Liability Insurance

The factors for a business to consider when getting a professional liability insurance policy to protect clients and the business include: 

• Levels of coverage: Make sure you get enough coverage to protect against major claims. Policies start at $100,000 in coverage but go into the millions. 
• Industry-specific needs: A business has unique risks based on its industry. Get a policy that is designed for your business needs. 
• Policy limits and deductibles: You can reduce the cost of a policy by increasing the deductible which is your portion of the claim. Assess the benefits of taking on more financial risk and potential financial loss. 

Finding the Right Professional Liability Insurance Policy for Your Business

Talk to a reputable agent or broker to help you get the right professional liability insurance policy. The agent should understand your industry and get a policy that fits your needs. Get a quote now from our top providers.