What Is Professional Liability Insurance for Small Businesses?
Professional liability insuranceis important for small businesses that provide a professional service. Every small business owner tries to run their company perfectly, but unfortunately, that’s impossible. If a mistake causes your customer or client a financial loss, they can sue your business. Even if you didn’t make a mistake, your clients could still sue your company.
Small business professional liability insurance can help protect your business from lawsuits claiming:
- Negligence
- Misrepresentation
- Inaccurate advice
- Failure to protect personally identifiable information (PII)
This type of coverage is also known as errors and omissions insurance or E&O insurance. It can help if:
- An accounting firm files a client's tax return with an error. The client has to refile their return and pay a penalty.
- A professional photographer misses the “I Do” kiss at a wedding. The customer sues the business for not delivering on promised services.
- An interior designer uses different materials from the ones stated in a renovation contract. The client finds out and sues the agency.
What Is Covered by Small Business Professional Liability Insurance?
Lawsuits and liability claims can be costly. That's why professional liability insurance is important. Small business professional liability insurance protects you by covering:
- Defense costs, like attorney fees for your legal defense team
- Judgments or settlements, which can be very costly
- Lost earnings if you can’t operate your business because of time spent in a deposition or trial
Professional liability insurance doesn’t cover all liability claims, like bodily injuries. For example, let's say someone sues your business after a slip and fall in your store. Your professional liability insurance coverage won't help. Instead, you'll need general liability insurance to cover bodily injuries.
It's a good idea to have other types of insurance to give your business well-rounded financial protection. For instance, you’ll likely need workers’ compensation insurance to provide important benefits to employees with a work-related injury or illness.
How Much Does Professional Liability Insurance Cost for a Small Business?
Every small business is unique and faces different risks. So, professional liability insurance costs vary. An insurance company can use different factors to determine costs. This may include:
- Business experience
- Location
- Employee size
- Claims history
- Policy limits
The best way to find out how much professional liability will cost your small business is to get a quote. In general, comparing quotes from multiple insurance companies is helpful for finding coverage that fits your needs perfectly at a price that works for you.
When you're ready to get a quote, make sure you have your documents ready. It's a good idea to have:
- A licensed professional within your company
- Documentation procedures
- Quality control processes
- Training initiatives for employees
- Copies of contracts
- Information on previous professional liability coverage
Who Needs Professional Liability Insurancefor Small Business?
Small businesses that provide professional services or advice should have professional liability insurance. Be aware that some states require certain businesses to have professional liability insurance. So, be sure you understand what your state laws are so your business is compliant. Otherwise, you can face fines or penalties.
We can help many types of businesses. We offer:
- Professional liability insurance for consultants
- Professional liability insurance for market research firms
- Interior design professional liability insurance
- Advertising agency professional liability insurance
- Professional liability insurance for graphic designers
- Technology professional liability insurance
- Errors and omissions insurance for technology
- Errors and omissions insurance in real estate
- Accountants professional liability insurance
Professional Liability Insurance Quotes for Small Businesses
We’re an insurance company with over 200 years of experience. We know your small business faces unique risks and we offer coverages to help business owners like you deal with those challenges.
Our specialists are here to help you get the right coverage to help protect your business. Whether you’re looking for professional liability insurance quotes for small businesses or need help with a claim, we’ve got your back.
Pros and Cons of Professional Liability Insurance
Some benefits of professional liability insurance include providing coverage for:
- Mistakes you or your employees make on the job
- Undelivered products or services
- Claims of negligence in your business operation
While it’s generally recommended for small businesses to have professional liability insurance coverage, one potential downside includes how the premium costs are calculated. Professional liability insurance costs are often calculated based on your revenue, number of employees, chosen policy limits and your industry. In many cases, they’re based on factors that are not in your control, like your state laws.
To learn more about professional liability insurance and if it’s right for you, get a quote today. The Hartford can help you get the answers to professional liability insurance frequently asked questions. We’re an insurance company that’s been helping small businesses get the coverage they need for over 200 years.
Last Updated: July 2, 2024
Additional disclosures below.
