If you consult, design, or provide any type of service to clients, you know that mistakes sometimes happen because, well, nobody’s perfect. Whether you accidentally miss a deadline or forget a critical requirement, these types of errors could expose your small business to costly lawsuits from your clients. If a client suffers a loss because of errors in your work, they could file a suit against your small business. Having professional liability coverage built into your policy can help protect your business from costs associated with these types of lawsuits.
Professional liability insurance helps protect your business if a client holds you responsible for errors in your work. If your client suffers a loss due to errors in your work, they could serve you with a lawsuit. If your client suffers a loss because they believe your service failed to meet expectations, you could face a costly lawsuit.
Professional liability insurance is designed to help professionals protect themselves from costly client lawsuits.
Any small business that provides a service for a fee should consider having this type of coverage, including:
- Graphic designers
- Web designers
- IT Consultants
- Management consultants
How does professional liability insurance protect my business?
One of the benefits of having proper insurance coverage is peace of mind. The truth is, mistakes can and do happen. If you provide a professional service to your clients in exchange for a fee, your business is vulnerable to professional liability risks. Knowing that you’re covered if you make an unfortunate mistake that results in a loss will help keep your mind at ease so you can continue to focus on your business.
Here are 4 common scenarios where professional liability insurance comes in handy:
- When you’re late for a very important date. If your business fails to provide services to a client in a timely fashion, and the delay causes a financial loss to the client, your professional liability coverage can help cover these costs so you can focus on the next task.
- When your client points their finger at you. If a client claims your work resulted in costly damages to their business, you could face a costly lawsuit for those losses. Professional liability coverage can help cover these costs.
- When the devil’s in the details. We trust that you’re very careful and thorough in your work, but every once in a while a mistake might slip through the cracks. If you overlook an important detail that results in your client not receiving the agreed upon service, your professional liability coverage is designed to protect you from costs associated with the situation.
- When you’re on the stand.If your business is found legally liable for negligence in the service you provided to a client, you may find yourself tangled up in a long and costly lawsuit. Your professional liability coverage can help with some of the legal costs you may face and help you get back to work quickly to reduce your lost income.
How else can I protect my business from professional liability risks?
Here are some things you can do as a small business owner to help protect your business from professional liability risks and help avoid lawsuits as a result of mistakes in your work:
- Stay organized! It’s always important to have a written and signed contract that spells out exactly what is and isn’t expected of you from your clients. It should have concrete deadlines and fees outlined as well. Have a calendar to follow deadlines and store paperwork in an easy to find location.
- Keep the communication flowing. While you’re working on a project or service for clients, make sure you’re consistently and clearly communicating with them about the status of the job. This helps keep their expectations more realistic.
- Have the proper steps in place to avoid disaster. Having proper quality control policies and procedures in place for your small business can be a big help in avoiding errors or omissions that result in a lawsuit. Doing regular follow-ups with clients is also a best practice.
- Provide referrals when necessary. Running a small business means constantly hustling to get as much work done as possible. Regardless of how hard you try, though, there might be certain jobs that you just can’t complete for your clients. If you’re no longer able to meet a client’s specific needs, try referring them to a specialist that you know and trust. This will prevent you from having too much on your plate, which can cause pressure and lead to mistakes.
- Double-check, triple-check, always check! Use a dedicated amount of time to review your work to make sure that you’re delivering everything to your clients that has been promised.
Even if you’ve implemented all of these best practices, some mistakes may still slip by like stealthy ninjas. Having professional liability insurance is an effective way to help keep your business shielded from the cost of minor mistakes and major lawsuits.
Other coverage options to consider:
Commercial general liability insurance: Commercial general liability (CGL) insurance is designed to protect you and your business from a loss if you’re found legally liable for bodily injuries or property damage to a third party caused by the product you sell or the service you provide. CGL insurance can also offer protection in situations where you or your employees are conducting business offsite.
Product liability insurance: Product liability insurance is often included in a CGL policy but not always. It’s important to double check that your small business insurance policy does protect you from risks associated with product liability claims.
Cyber risk and data breach coverage. Cyber attacks are an ongoing threat to small businesses and have continued to rise recently. Cyber event expense coverage is designed to help small businesses that rely on technology mitigate some of the expenses that may incur as a result of a cyber hack.
Property insurance: As a small business owner, you likely rely on your property, tools, equipment and technology to help keep your business running. If one of those key pieces of the puzzle was damaged and needed repair, you may not be able to continue operations. This is when you need property insurance coverage.
Equipment breakdown insurance: Your equipment is covered in your property insurance policy for damage caused by external sources, such as fire, floods and weather damage; however, you may not be covered for electrical or mechanical damage. In these situations, you’d look to your equipment breakdown insurance.
Commercial auto insurance: If you or your employees use your vehicle for business purposes you need commercial auto insurance to protect that vehicle in ways your personal auto policy may not be able to.