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Sometimes the question is do I need General Liability or Professional Liability?
Often the answer is both. Here is an explanation of professional liability.
What Is a Professional Liability Insurance?
Professional liability insurance, commonly known as E&O (Errors & Omissions), protects businesses against civil lawsuits and negligence claims. As opposed to general liability insurance, which covers accidents, professional liability insurance covers professional mistakes. Professional liability insurance covers everyone from an electrician who miswired a light fixture to a nail technician accused of not properly cleaning products between customers, resulting in a nail infection. Professional liability insurance for small businesses is what supports you if you make this kind of mistake or even if your client thinks you did.
What’s So Important About Professional Liability Coverage?
It Covers Different Things
If you have general liability insurance, aren’t you already taken care of? it’s a bit more complicated than that. General liability insurance covers physical damage to other people and accidents that directly cause injury or property damage. Professional liability insurance, however, goes beyond accidents. Let’s say you’re a plumber installing a sink. You drop your heavy wrench, scratching some expensive antique furniture. This property damage would be covered by most general liability policies.
If, instead, you install the sink properly and a month later the customer calls and says your installation caused damage to the plumbing and now she needs to replace all the pipes in the bathroom, that’s where professional liability would come in. Another example would be a personal trainer who was asked to prepare a client for a marathon. If the client then experiences chronic pain in his legs, he could claim that it was due to poor advice from the trainer and make a claim against the trainer’s professional liability insurance.
Your Reputation is On the Line
Everybody makes mistakes, and that’s as true for general contractors as it is for nail technicians, but your potential clientele isn’t thinking of that when they’re choosing which professional to hire. That’s why it’s important not to let a single mistake take over your reputation. If a customer claims you made a mistake (whether or not you did), small business professional liability insurance coverage is what lets you move on quickly and smoothly instead of getting bogged down in attention-grabbing court cases or costly payouts. It can also save you from fighting with customers, as rather than arguing over which costs you are or aren’t willing to pay–what damage you did, or didn’t, cause, you can instead bring in your insurance company to determine what happened and what the appropriate course of action should be.
What Does Professional Liability Insurance Cover?
What can be confusing about professional liability insurance is that some claims such as copyright infringement, legal fees, advertising harm and more are also covered by your general liability policy. What is specifically and only covered by professional liability insurance is very different for each profession, since professions carry different risks. A client claiming permanent damage to their hair from bad products could be considered professional liability, but so could a cabinet being installed improperly or using the wrong cleaner and destroying a precious rug–and those are obviously very different types of damage. In some fields, professional liability insurance coverage is so specialized that it even has its own title, such as medical malpractice insurance for doctors.