If you provide services or professional advice to clients then you need to learn more about the importance of adequate professional liability coverage. This kind of insurance gives you protection in the event that your client suffers a financial loss due to neglect or error from your business. Litigation costs and punitive damages arising from potential legal action by customers can set you back thousands of dollars and ultimately ruin your business.
Whether you are a practicing lawyer, doctor, or accountant or you provide a service such as plumbing, construction and even transport, informing yourself of exactly why you need a professional liability insurance policy is of paramount importance for a successfully run business. Here are some of the important reasons that you need PLI:
Saves Your Business Money
Some companies, especially start-ups, are frequently deterred from professional liability insurance because of expensive premium costs; however, it is important to think more long-term. While the initial expense might seem high, it will pale in comparison to any potential legal costs for your business proceeding from a lawsuit. Damages resulting from negligent advice can bankrupt your business.
Only recently, the Australian courts awarded a teenager in Brisbane $75,000 due to negligence by an operating surgeon. This can give you some idea of the costs involved in not having adequate professional liability insurance. Knowing you have cover from any legal action is a huge weight off your shoulders as an advice/service provider. Surely the initial expense is worth saving yourself exorbitant sums of money.
Helps Risk Management
By its very definition, professional liability insurance mitigates certain risks for your company. As an addition to this though, purchasing a policy can help in broader terms with risk management. Generally, insurers that provide professional indemnity cover also offer continuing risk management support. They may perform legal reviews of your business contracts to ensure they are fully compliant with any relevant laws and inform you on how to manage or avoid other potential liabilities. Continued support and education will ensure you are more aware of the risks you face in your business and helps you develop a solid risk management structure.
The peace of mind that business liability insurance gives you is well worth the initial cost. As a professional adviser or service provider, one of the most challenging risks you face is damages resulting from negligence or errors on your part. Being covered in this area is vital in ensuring your business has a healthy financial outlook.