Small Business Professional Liability Insurance

What Is Professional Liability Insurance for Small Businesses?

Professional liability insurance is important for small businesses that provide a professional service. Every small business owner tries to run their company perfectly, but unfortunately, that’s impossible. If a mistake causes your customer or client a financial loss, they can sue your business. Even if you didn’t make a mistake, your clients could still sue your company.

Small business professional liability insurance can help protect your business from lawsuits claiming:

Negligence
Misrepresentation
Inaccurate advice
Failure to protect personally identifiable information (PII)

This type of coverage is also known as errors and omissions insurance or E&O insurance. It can help if:

An accounting firm files a client's tax return with an error. The client has to refile their return and pay a penalty.
A professional photographer misses the “I Do” kiss at a wedding. The customer sues the business for not delivering on promised services.
An interior designer uses different materials from the ones stated in a renovation contract. The client finds out and sues the agency.

What Is Covered by Small Business Professional Liability Insurance?

Lawsuits and liability claims can be costly. That's why professional liability insurance is important. Small business professional liability insurance protects you by covering:

Defense costs, like attorney fees for your legal defense team
Judgments or settlements, which can be very costly
Lost earnings if you can’t operate your business because of time spent in a deposition or trial

Professional liability insurance doesn’t cover all liability claims, like bodily injuries. For example, let's say someone sues your business after a slip and fall in your store. Your professional liability insurance coverage won't help. Instead, you'll need general liability insurance to cover bodily injuries.

It's a good idea to have other types of insurance to give your business well-rounded financial protection. For instance, you’ll likely need workers’ compensation insurance to provide important benefits to employees with a work-related injury or illness.

How Much Does Professional Liability Insurance Cost for a Small Business?

Every small business is unique and faces different risks. So, professional liability insurance costs vary. An insurance company can use different factors to determine costs. This may include:

Business experience
Lugar
Employee size
Claims history
Policy limits

The best way to find out how much professional liability will cost your small business is to obtener una cotización. In general, comparing quotes from multiple insurance companies is helpful for finding coverage that fits your needs perfectly at a price that works for you.

When you're ready to get a quote, make sure you have your documents ready. It's a good idea to have:

A licensed professional within your company
Documentation procedures
Quality control processes
Training initiatives for employees
Copies of contracts
Information on previous professional liability coverage

Who Needs Professional Liability Insurance for Small Business?

Small businesses that provide professional services or advice should have professional liability insurance. Be aware that some states require certain businesses to have professional liability insurance. So, be sure you understand what your state laws are so your business is compliant. Otherwise, you can face fines or penalties.

We can help many types of businesses. We offer:

Professional Liability Insurance Quotes for Small Businesses

professional liability insurance for small businesses

Somos una compañía de seguros con más de 200 años de experiencia. We know your small business faces unique risks and we offer coverages to help business owners like you deal with those challenges.

Our specialists are here to help you get the right coverage to help protect your business. Whether you’re looking for professional liability insurance quotes for small businesses or need help with a claim, we’ve got your back.

Pros and Cons of Professional Liability Insurance

Some benefits of professional liability insurance include providing coverage for:

Mistakes you or your employees make on the job
Undelivered products or services
Claims of negligence in your business operation

While it’s generally recommended for small businesses to have professional liability insurance coverage, one potential downside includes how the premium costs are calculated. Professional liability insurance costs are often calculated based on your revenue, number of employees, chosen policy limits and your industry. In many cases, they’re based on factors that are not in your control, like your state laws.

To learn more about professional liability insurance and if it’s right for you, obtener una cotización today. We’re an insurance company that’s been helping small businesses get the coverage they need for over 200 years. We also have insurance agents and specialists that can help answer any questions you have.

Last Updated: December 29, 2022

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