When you buy a liability insurance policy for your business, you are protecting yourself in case you make mistakes that harm others. Because these mistakes might be your fault, you could have a legal responsibility to repay those affected by the problem. Liability insurance is the coverage that helps you do so.
However, there are many types of liability insurance on the market, and that is why most businesses carry several policies. Each will apply to a different loss scenario. One that most businesses need is called professional liability insurance. It is there to protect you from specialty risks that are less physical and more monetary, but that can still cause someone else significant harm.
Let’s consider some of the reasons your business needs this coverage.
Reason 1: Mistakes Happen in Every Business
Professional liability insurance is sometimes called malpractice or errors & omissions (E&O) coverage. It protects the policyholder when mistakes made in the course of their services or professional advice causes others a monetary loss. Even though you strive not to make mistakes, sometimes they just happen, and it is professional liability coverage that can help you out of a tough spot.
Reason 2: Liability Lawsuits are Expensive
If someone sues you over a business mistake, then you are going to have to respond, and that could cost a lot of money. Even if you come armed with the best lawyers and defense evidence, the bills could quickly mount. Professional liability insurance can help you cover your legal fees, settlements and other costs related to the suit.
Reason 3: You Protect Your Business’s Reputation
Professional liability insurance is a big indicator that you take your professional reputation seriously. It shows that you are both willing and able to respond to mistakes you make in appropriate ways. That way, you can represent your business in responsible and conscientious ways.
Reason 4: You Can Create Commercial Stability
Because you can protect both your company’s finances and its reputation through professional liability insurance, you go a long way towards making your business commercially viable long term. You have less of a risk of suffering a significant downturn that you cannot recover from.
Reason 5: You Might Have a Requirement to Buy It
In many industries, you will be required to buy professional liability insurance to legally operate. The clearest example of this scenario is in the medical field. Most states require all licensed health care providers to buy and maintain medical malpractice insurance. Therefore, successfully acquiring a policy could be your token to growing a successful business.