General liability policies provide coverage for specific obligations, such as bodily injury. When businesses and individuals are legally liable, however, they’re often exposed to many additional obligations. Litigation insurance protection is a broad term for the risk management of these obligations. The most common form of such protection is professional liability insurance.
Why You Need Professional Liability Insurance
Such insurance fills the gap between what a policy covers and what we’re likely to be liable for in the case of an accident or negligence. In every field, specialists are exposed to situations where they are liable for damages. Often, these scenarios involve no ill will or direct negligence.
Consider a common scenario of a financial advisor with a client suing for damages because allegedly unsound advice led to significant financial loss. If the financial advisor loses the lawsuit, a general policy would not cover this type of loss. Professional liability insurance specifically tailored to financial advisors, however, would, at least up to the insurance policy maximum.
What is Umbrella Coverage?
Business umbrella coverage is professional liability insurance that extends a general policy with supplementary coverage for lawsuits, legal fees and even settlements. Umbrella coverage often includes any form of business liability exposure. In other words, a business does not even have to be aware that it is potentially liable for something. If it arises, the umbrella policy acts as catch-all.
What is Workers’ Insurance?
Workers’ insurance is a very specific kind of professional liability insurance. The most common type of worker claim is workers’ compensation, which generally occurs because the worker was hurt on the job. This can be a devastating liability for small businesses because they must pay the hurt worker plus they must pay his replacement. This insurance manages that risk, and in the event it does occur, the policy covers salary and any other benefits owed to the worker.
Business vs. Professional Liability Insurance
The terms are often used interchangeably. Sometimes, the term business is used to indicate policies that cover scenarios where only the business can be liable. The term professional is used to indicate policies that cover scenarios where both the business and the individual are liable.
How Much Does Professional Liability Insurance Cost?
Cost depends on a wide range of factors, and it can be very complex. This can make it very difficult on the new self-employed person in search of professional liability rate information. The first consideration is the amount of coverage needed, and for many fields, this is not obvious and requires expert input. The amount of coverage will directly determine the amount of the premiums.
It is often a good idea to determine needed coverage through a third party. Once that information is known, the consumer can use it to comparison shop the various insurers. The Internet has made this a much easier proposition. Using insurance brokers or networks, a consumer can plug the information in one time and receive quotes from a wide range of insurers in return.