Every professional needs to consider the risks of doing business, including facing claims about substandard services from clients. Insurance coverage is one of the most important means of mitigating professional liability. Skilled, licensed professionals often carry specialized insurance coverage.
For example, real estate agents may carry errors and omissions coverage in case they accidentally make mistakes on paperwork or give their clients improper advice. Professional liability insurance can protect individuals from lawsuits by providing direct compensation to clients affected by mistakes that they have made.
Coverage is critical to avoiding litigation and ensuring personal financial liability. How much professional liability coverage do people running their own practices or small businesses generally need to carry?
Client demands often set the standard
When a professional specifically partners with businesses, they may find that the companies that hire them have a standard expectation for insurance coverage. Frequently, those contracting with businesses need to have proof of at least a million dollars in professional liability coverage. Maintaining that amount of coverage can indemnify the professional in the vast majority of cases where clients might make a claim. It can also help make them eligible for lucrative contracts with successful businesses.
Potential losses can influence coverage as well
The nature of the services that a professional provides can influence how much coverage might be necessary for their protection. Architects who could face multiple claims from different parties if an error results in an unsafe edifice might need to carry more than a million dollars in coverage. Their policy may need to cover the losses suffered by the property owner and any injuries people incurred when an issue arose.
The more people that a single mistake could impact and the greater the likelihood of a professional’s mistakes causing substantial financial setbacks, permanent injury or death, the more important generous amounts of coverage become. Professionals may need to sit down with someone who understands liability rules and insurance regulations to decide what amount of coverage is necessary for optimal protection.
Purchasing adequate insurance coverage is a key step toward limiting personal and professional liability. Professional liability insurance can help protect people against mistakes or oversights that could not only affect their careers but also their personal finances.