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What Is Professional Liability Insurance Coverage?
Professional liability insurance protects businesses when employees make mistakes in the professional services they’ve provided to customers or clients. This coverage is also known as errors and omissions insurance (E&O). Even if you’re an expert in your business, mistakes happen. And if your client or customer thinks a mistake in your professional services caused a financial loss, they can sue you.
What Is Graphic Design Insurance
Whether you’re creating a new logo, a flyer or an entire website, your graphic design firm brings clients’ ideas to life. But like other businesses providing professional services, your graphic design firm faces unique risks. Graphic design insurance is business insurance that can help protect your firm from those risks.
Maybe you have a client who blames your logo design for a decline in their business. Or maybe your client believes a design you created wasn’t what you agreed to. Regardless of the issue, mistakes can turn into lawsuits against your firm. This is where professional liability insurance can help.
Business Insurance for Graphic Designers
There are several different types of business insurance coverage. Workers’ comp is one, and it helps provide benefits for employees who get hurt or sick because of their job. Meanwhile, data breach coverage helps protect you in case personally identifiable information is ever lost or stolen.
Graphic design insurance can help protect design professionals, graphic designers and other creatives from different risks. One type of graphic design insurance is professional liability insurance, which helps protect your firm from client lawsuits. Lawsuits can happen if your design firm makes a mistake, or even if your client just thinks you made a mistake.
Liability Insurance for Graphic Designers
There are two types of liability insurance for graphic designers. General liability insurance (GLI), also known as public liability insurance, helps protect you from claims if someone says your business caused:
- Lesiones corporales
- Daños a la propiedad
- Copyright infringement
Professional liability coverage helps protect your business from lawsuits related to the services you provide. It’s also called:
- Errors and omissions insurance
- E&O insurance
- Professional indemnity insurance
No matter how hard you try to avoid them, mistakes can happen when you’re a graphic designer. Professional indemnity insurance for graphic designers helps protect you if you made a mistake or left out a part of the service you agreed upon with your client. That’s why for designers, professional indemnity insurance is important.
What Professional Liability Insurance for Graphic Designers Covers
A professional liability insurance policy helps cover:
- Professional negligence
- Inaccurate advice
- Misrepresentation
- Violation of good faith and fair dealing
Insurance companies write these policies on a claims-made basis with a retroactive time frame. This means your policy only covers claims made against you for something that happens after the retroactive date.
Let’s say a client files a lawsuit because they believe a decrease in sales is due to a logo you created in 2016. Because that event occurred after your policy’s retroactive date, professional liability insurance can help cover your legal costs.
Now, let’s say your firm faces a lawsuit from 2010 because you didn’t meet the full terms and conditions of a contract. That event took place before your retroactive date, so professional indemnity insurance wouldn’t cover your defense fees and any damages awarded.
Estimating the Cost of Professional Liability Insurance for Graphic Designers
Your cost for professional liability insurance can depend on many factors, including:
- Policy terms, like choosing a higher coverage amount or earlier retroactive date.
- Company size, because the more employees you have, the more it can cost for coverage.
- Location, because some states have liability coverage minimums that can increase your insurance cost.
- Claims history if your firm has a history of lawsuits.
- Revenue, because if your firm generates more revenue, it can increase your risk for lawsuits.
Because of these different factors, your design firm's insurance rate may be higher or lower than someone else’s. A good estimate is that you’ll pay about $500 to $1,000 a year per employee for coverage. So if your design firm has 10 employees, you may pay between $5,000 and $10,000 for E&O insurance.