MONDAY, JANUARY 27, 2020
When insuring your business, it’s important to make sure you have the right policy to protect your assets in case of a lawsuit. Unfortunately, your professional liability policy may not be as comprehensive as you think.
Professional liability protects a business when a client files a claim due to loss caused by the business’ services. For example, if a banker makes a filing error that causes a client to lose money, professional liability will protect the company against a possible lawsuit that follows.
Before you sign up for a professional liability policy, be sure that the insurance agents you’re considering are professionals when it comes to commercial insurance. Check reviews and speak with other businesses that insure with the insurance company. Once you’ve decided on an insurance company, read the policy carefully. Some policies have limits on coverage. If your business faces many different types of risks, it’s important to ensure that your professional liability policy covers them. Industries that face several unique risks include:
Different industries need different amounts of coverage. If your business is likely to be sued, you’ll need a higher policy limit. This means higher premiums, but also means that you should have the right amount of coverage to cover a claim.
- Medical practices
- Construction companies
- Real estate brokers
- Insurance professionals
What are the Types of Professional Liability?
There are two types of professional liability policies: occurrence and claims-made. An occurrence policy covers events that occur while the policy is active. A claims-made policy covers claims once they’re made even when the act that triggered the claim occurred before the policy was active. In summary, the coverage of an occurrence policy depends on when the event occurs while coverage for a claims-made policy depends on when the claim occurs. Professional liability policies are most often claims-made policies. Consider the necessity of your industry. In some industries, claims will take longer to file while others are more immediate.
Also make sure you’re aware of your policy’s possible exclusions. A professional liability claim may be denied in cases of:
- Employee injury or lawsuits
- Employment practices
- Business property damage
- Intentional acts
- Criminal acts
How Much Does Professional Liability Cost?
Rates vary for professional liability depending on the profession, claims history and location of the business. On average, a business may pay $710 a year for professional liability insurance coverage.
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