Mackay Insurance Blog
Not Having Professional Liability Insurance for Your Business Is a Liability
Professional liability insurance is the unsung hero for small businesses and solo-preneurships as well as businesses of all sizes. Why?
You may do a perfect job of shoring up your company from the inside out, controlling for every unknown that is under your control. But what about all the things that you can't control, such as the actions of employees, vendors and volunteers?
For this, you need professional liability insurance (also called business liability insurance). This is the way you can protect your business from the outside in.
In this post, we walk you through the different industry-specific types of business liability insurance. We will also discuss the categories of coverage this insurance policy offers you and three reasons why no business should be without it.
What Is Business Liability Insurance?
Business liability insurance protects your service-based company in the event a customer claims you or someone acting in your business's name caused them harm through the act of providing services.
This is why business liability insurance is often also called business negligence insurance or business indemnity insurance.
It is important to note that this professional liability insurance is designed to protect your business from negligence up front, well before fault has been determined. This can be life-saving for a small business of limited means.
As we discuss in the next section here, there are also other names for this type of policy depending on what industry your company serves.
What Type of Business Liability Insurance Do You Need?
All businesses have customers, which means all businesses can be vulnerable to professional liability lawsuits.
At the root of every professional liability lawsuit is an unhappy customer who believes they have been harmed in some way by what your company provides or does.
And when that unhappy customer decides to file a lawsuit against your company, professional liability insurance steps in to limit your exposure as you move through the legal process to resolve the issue.
1. Errors & Omissions liability insurance.
If you work in a service-based business that is not medical or media-related, you will probably need a type of business liability insurance called E&O, or errors and omissions insurance.
E&O insurance protects your business from claims against you related to misrepresentation of services, negligence, good faith violations, mistakes, omissions and errors that result in financial harm to the client.
2. Malpractice liability insurance.
If your business functions in the medical and health services field, you will probably need malpractice liability insurance.
This type of policy protects medical professionals against allegations of negligence, errors and omissions, misconduct and similar situations, including treatment or medical equipment-related harms.
3. Media liability insurance.
If your company operates in the media and advertising industry, then the policy you need is called media liability insurance.
This insurance product protects your business if a customer decides to sue you for issues such as false advertising, contract and confidentiality breaches, misrepresentation, service delays, omissions, errors, violations of copyright, defamation or reputation harm and similar issues.
3 Universal Reasons Your Business Needs Liability Insurance Protection
Now that you understand the basics of what business liability insurance is and how it addresses specific concerns in different industries, let's talk about the three universal reasons why all businesses need liability insurance protection.
1. Peace of mind against the future unknown.
If there is one thing the last two years have taught business owners everywhere, it is that the future unknown is impossible to predict.
We just never know when we wake up each morning what the day may hold.
There are companies today that are only in business because they had a professional liability policy in place when a customer brought a lawsuit against them.
Even if you are in the right, your business may not have the means to outlast the often lengthy, costly legal process itself.
2. A financial cushion.
It is exciting to watch a solo-preneurship begin to grow and take on staff. But as this occurs, in addition to new opportunities you’re receiving, you are also taking on new liability.
You are not doing all of your marketing, selling and serving alone. You now have a staff that speaks and acts on your behalf under the auspices of your business name.
This is when the financial protection that professional liability insurance affords you is simply no longer optional. If an employee says or does something that triggers a lawsuit, you will ultimately be on the hook to get the issue resolved.
3. Protection from business identity theft.
As if the threat of personal identity theft wasn't terrifying enough, now business identity theft is also on the rise.
Many business owners get confused about what constitutes business identity theft. Here, what we are talking about isn't cyber crime or data breaches (there are separate business insurance policy products to cover these threats).
Instead, it is your business identity itself that is misused or misrepresented. This can occur when cyber criminals gain access to your business tax ID number, business bank account or credit card numbers and other sensitive information linked to your company.
The criminals can then use this information to access existing funds or open new lines of credit in the name of your business, methodically draining your company dry financially.
In addition to implementing your own internal risk management protocols and performing regular company credit checks, your business needs professional liability insurance to protect you from the potentially catastrophic impact of business ID theft and fraud.
Choose Mackay In Napanee and Belleville for Your Business Insurance Needs
Here at Mackay Insurance, we are proud to serve the insurance needs for businesses of all sizes and growth stages in and around the Napanee and Belleville areas.
Get started in just a few minutes with our fast and free professional liability insurance quote generator.