Professional liability insurance is not mandatory by law, but depending on a professional’s area of work, it can still be a core asset to their processes.
Professional liability insurance is an umbrella term, and there are typically more specific policies to choose from, such as E&O (Errors and Omissions) insurance or professional indemnity insurance. Still, context is key here. There are times where it really is an essential resource, and other instances where it is optional, but still incredibly useful.
We have made some of these distinctions for you below, but champion the use of professional liability insurance all the same.
Compulsory: Satisfying Regulators
Regulators can breeze into a business and greatly influence its running, passing key judgments upon them.
For certain professions, one of the criteria that must be met in their assessments is professional liability insurance. For instance, architects and engineers are generally required to be holders of these types of policies.
Repairs for faulty work and other amendments are covered here, which means clients will always receive a functional and safe environment in which to live or work. These types of guarantees are crucial to the success and trustworthiness of these professions and keep regulators happy.
Risk Specialty Group provide excellent insurance for architects and engineers, with affordable coverage being provided. Personal injuries, as well defense costs for things like legal and negligence claims are all covered here. Remember, even the most skilled experts in these crafts are prone to the occasional accident or oversight, so insurance policies like these can be a real lifeline.
Optional: Protection Against Dissatisfied Customers
It is not just the regulators who can present problems – customers and clients can also.
An NBC article from 2018 noted that some businesses view professional liability insurance as a way to protect themselves against unhappy clients, with one example given being a wedding photographer taking photos the newlyweds do not like. Obviously, there is not as much at stake here as with an architect or engineer, but all the same, a wedding photographer will need to watch their back with this type of coverage.
It is also worth remembering that these types of disputes can be a drawn-out legal process. Additionally, it can be taxing both mentally and emotionally on the professional also, as some disgruntled clients may be extraneously petty or even potentially running scams to receive compensation for so-called ‘bad’ work that fulfils the brief. Not all business to client and customer relationships are innocent and nice, so some firms would do well to keep that in mind.
Compulsory: Fulfilling Client Contracts
Honest clients will have terms that need to be met from the get-go, and they will present that fact through the contracts they provide.
A staple point of any business contract is a liability clause, and many clients may stipulate that they will blame the businesses they work with should any problems arise by default. Therefore, professional liability insurance is an important asset here, granting you access to a wider pool of work as you meet the contractual demands of more tightly wound clients. Firms should set their egos aside in these instances. Otherwise, their pride could well stunt their operations, and cause them to spiral into a heavy decline overtime.