The job of a financial consultant or adviser is to provide recommendations. Financial advisers tell clients how to better their portfolios.
These clients count on your advice. They expect it to improve their lives. They expect you to have knowledge backed by facts.
When you make a mistake, it can cost your business big time. That is where professional liability insurance can step in. This form of business insurance is critically important for anyone working in this field.
How Does Professional Liability Insurance Help?
This type of insurance has a specific goal. It helps protect you from claims of negligence filed by your clients. It can cover misrepresentation of claims, and malpractice claims.
There is usually no legal requirement to maintain this type of coverage. However, it is nearly always essential. If you decide not to carry professional liability insurance, realize the financial risk your taking. The risk of loss expands greatly when you understand the risk of loss is not just a result of what you may have done or not done, but also includes the cost to prove you weren't negligent.
Because of the nature of your business, this type of liability insurance is essential. If your client loses money as a result of your action or inaction, this person may sue you.
There is no way to protect yourself from making mistakes – even if you have a contract that limits your liability. You cannot control the stock market, for example.
However, a client can claim you misrepresented a level of risk. They can claim you did not act soon enough to preserve their portfolio.
What Does Professional Liability Insurance Cover?
For financial advisers, professional liability insurance can provide a significant amount of protection. Most policies cover the following:
- Lack of regulatory compliance
- Legal defense coverage
- Breach of fiduciary duty
These policies have some exclusions. Verify these before you decide to obtain and rely on the coverage. Discretionary advice is an exclusion on many policies, for example. Some policies have other exclusions. Read through your plan to know what your coverage is in total.
Work with your Southwest Commercial Insurance agent carefully here. Professional liability insurance is just one form of coverage your company needs. Your agent can help you structure policies to minimize most risks.
Keep in mind that accidents can happen even in the best situations. To avoid the costly fallout, have enough coverage.
Often, if one client files a claim, others may follow. This is why a high-valued policy is so important. It keeps your business safe from such devastating claims.
Contact Southwest Commercial Insurance today to learn more about professional liability insurance.