Every business in every industry faces its own set of unique risks. But for those who make their living offering a service, such as a contractor, an accountant, or a content creator, for example, dissatisfied clients can also end up presenting challenges and lawsuits. Any business or business owner who sells their expertise should consider protecting their operations with professional liability insurance, known as errors and omissions insurance. This coverage protects companies and contractors against customer claims of late, unsatisfactory, or incomplete work. Any accusations related to these claims can not only hurt someone’s pocketbook but their reputation in their industry.
Here’s a better look at what professional liability insurance is and who needs this coverage.
Who Really Needs Professional Liability Insurance?
Professional liability insurance provides protection for small business owners who provide a service or make a living from their expertise. Some states require doctors and lawyers to purchase this insurance coverage, but professions ranging from construction to design benefit from this insurance.
Here are some other examples of professions who can find value in professional liability insurance:
- Real estate brokers
- Architects, designers, and engineers
- Accountants and bookkeepers
- Marketing and advertising professionals
- IT professionals and programmers
- Financial consultants
- Various types of consultants
In all of these professions, which vary by industry, there is a through-line that connects them all: they each provide advice or service to clients who could end up experiencing some harm as a result. For example, a contractor recommends particular building materials to be included in a new structure. If those materials end up harming people in the new building, such as a falling pipe or unstable wall structure, the client of the contractor has a case to sue them for damages and take them to court.
If a contractor goes to court and the verdict lands in their favor, they still take a hit to their reputation. After all, being known as a contractor who provides shoddy quality can only harm their prospects for more work.
What’s more, even if they come out on top of a lawsuit, they would still have to fork over massive legal fees for their representation. This is where having professional liability insurance comes into play by providing coverage for legal fees and payouts to those who end up suing.
No matter how careful someone is, mistakes can occur if there are miscalculations, miscommunications, or if someone doesn’t follow the appropriate protocols. Professional liability coverage is the main kind of insurance to help protect these individuals or businesses against lengthy lawsuits and costly claims.