Professional Liability Insurance
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Professional Liability Insurance

All professional service providers face unique risks while carrying out their day-to-day activities. You may have a large consulting firm or are an independent advisor servicing people from your home office. Either way, you need professional liability insurance to keep you safe from any financial, legal troubles.

Not every piece of advice you offer can guarantee success to your client. For instance, as a stock advisor, you studied a particular company’s stock and advised your clients to invest in it. The market crashes after a few days, and your clients lose all their money. Your client can file a legal suit against you in such a scenario. They can claim that you did not deliver services properly, which caused a loss in their business. You will need some external support to cover the legal costs of the lawsuit.

Your professional liability insurance is the external support covering and offering you financial aid in such situations. Comparewise makes finding insurance solutions more accessible to you, helping you find the right policy for a reasonable budget.

Comparewise is a local Canadian company and understands how small businesses must protect what’s important to them and their businesses. Our platform offers you all the information you need to compare different insurance providers and select the one that suits your needs.

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What is Professional Liability Insurance?

Professional liability insurance protects all professional service providers like accountants, physicians, and lawyers against claims initiated by their clients. This policy works by protecting businesses or individuals who offer consultation and services and compensates the costs arising from the loss they have caused to their clients.

In simpler words, professional liability insurance will cover the costs arising due to lawsuits filed by your clients either due to misrepresentation or negligence of services. Even if you have general liability coverage, you still need to insure your professional services with this insurance. This is because general liability coverage does not offer protection to clients against claims arising out of business practices like malpractice, negligence, or misrepresentation.

Whether you work as an individual or have hundreds of employees working under you, your business faces the same professional risks. You need to find a suitable insurance provider who will help you minimize the risk and ensure the continuation of your services.

At Comparewise, you can find the best, verify insurance providers and analyze multiple options before selecting one. You can use our ‘Get Started’ form on the homepage to fill out your needs and the company’s size. Our algorithm will match you with the best insurance providers based on your requirements.

Why Do You Need Professional Liability Insurance?

Not all your advice may turn out to be good. As a professional service provider, you advise your clients after studying the history and analyzing a product. There is a good chance that you might miss out on a thing or two, which leads to a loss for your clients. It would be best to have professional liability insurance to ensure your business’s continuity.

Covers Misrepresentation or Violation of Good Faith

Professional liability insurance will keep you covered against all claims made against the services provided by your business. General liability insurance only covers property damage, personal injury, or bodily injury. All other lawsuits get covered under professional liability insurance, including negligence or misrepresentation of services.

Building Credibility

Professional liability insurance covers you in case of financial assistance and adds to your company’s credibility. Many companies seek consultation with businesses or individuals covered with this insurance.

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How Professional Liability Insurance Works

Depending upon your profession, liability insurance can have different names. If you are an insurance agent or a real estate broker, the insurance is called Errors and Omissions insurance. On the other hand, medical professionals need medical malpractice insurance to cover themselves against any claims or lawsuits filed by their patients.

The primary purpose of professional liability insurance is to protect insurers against any claims filed by their clients. It is generally in respect to professional services or consultations offered. These claims can arise due to negligence or error in providing a professional service to your client, causing a substantial financial loss to them.

This insurance coverage is provided majorly based on claims. It covers the professional liability of individuals for only the allegations made while the policy was active. The insurance provider would not cover any claims made against a business before the activation of the policy.

Features of Professional Liability Insurance

Even though professional liability insurance is not compulsory for professional service providers, it is definitely worth your money. It will allow you to get coverage in case of any claims or legal disputes. It ensures that your company does not face any substantial financial loss.

Wide Coverage

Professional liability insurance offers a wide range of coverage for businesses and individuals. It will cover all the legal liabilities that will arise out of errors, negligence, or omission of any service that may cause damage to the property or reputation of your client. It will cover all the legal expenses, including your lawyer’s fees, documentation filing charges, or penalties levied by the court of law.

Group Policy

Most insurance providers will offer professional liability insurance as a part of a group policy. It is helpful because it allows you to pay an affordable monthly premium and get good discounts on your policy. The discount will vary depending upon the number of group members added to the plan.

Financial Protection

A small error in your service is sometimes enough to drain your client’s bank account. This financial loss or a part of it will fall on your shoulders and can be enough to hinder your company’s day-to-day business. For instance, perhaps you are a real estate agent and fail to file the required documents on time, and the client loses their deposit. Your company will be responsible and will have to reimburse the client. Professional liability insurance would be your external support in such cases.

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Who Needs Professional Liability Insurance?

A wide range of businesses, whether big or small, may need professional liability insurance to protect themselves against the financial losses arising due to allegations or lawsuits. They are likely advised for companies that deal directly with their clients. It is because, at times, your customers might sue your business or make a claim based on their perspective, even if you made no error or mistakes at your end.

While some insurance policies will cover the financial losses, others might cover bodily injuries or property damage made to a third party. Some insurance providers also offer a hybrid service that includes professional and general liability insurance features.

Professional liability insurance is not specific. The coverage will depend upon the risks of your business industry and the size of your company. You will need to customize your plan based on your unique business model.

Some professions that may need professional liability insurance are

  • Insurance agents
  • Real-estate agents
  • Management consultants
  • Graphic designers
  • Lawyers
  • Architects
  • Accountants
  • Photographers
  • Interior decorators
  • Counsellors
  • Financial services
  • Legal professionals
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What Is Included in Professional Liability Insurance?

Professional liability insurance will protect professional businesses and other companies from client claims alleging financial loss due to negligence of service, as well as lawsuits alleging misrepresentation, misconduct, or failure to deliver promised services.

The insurance policy typically covers legal costs and damages related to the following coverage areas.

Media and Advertising

In the new age of technology and easy access to the internet, almost everyone has opinions about the advertisements released on the web. If a digital project provided by your company results in your client getting sued for defamation or slander, the chances of you getting pulled also exists. The insurance policy covers all the financial costs resulting from these lawsuits.

Professional Services

Suppose you were unable to deliver a promised service to your client on time or made an error in your advice, and the client had to face substantial financial loss. In that case, they will sue you for the same. Your professional liability insurance will protect your company and aid you financially against these lawsuits.

Products

Suppose you are a manufacturing company. Your product caused a physical injury to your clients or didn’t work as promised in your brochure. In that case, your client has the right to sue you for misrepresentation of information. The liability policy will cover all the legal fees and the penalty you will have to pay to your clients.

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What Professional Liability Insurance Does Not Cover

While professional liability insurance covers many factors and situations, there are a few exceptions with this insurance policy.

  1. Consider the possibility of your client suing you for rendering services under the influence of drugs or alcohol. In that case, your insurance provider won’t cover you for such misconduct.
  2. What if your company is involved in anti-fraud, criminal activity or is violating the law in any manner? Then the insurer will refuse to provide financial aid.
  3. Suppose your business infringed on any trademarks, patents, or copyrights, and a lawsuit gets filed against you. In that case, the insurance provider will not cover your legal expenses.
  4. If you have willfully denied service to your client, then your insurance policy will not protect you.
  5. Legal liabilities arising from personal injury or acts of vengeance like slander, defamation, wrongful eviction or detention are not covered under professional liability insurance.

Things to Consider before Buying Professional Liability Insurance

You might get overwhelmed looking at the insane amounts of options available in the market. You need to analyze your industry, the size of your company and then evaluate the risks before buying an insurance policy. The right insurance can help your company grow and scale-up, and the wrong one can leave you in mid-water at the time of emergency.

Here are a few things you should consider before purchasing professional liability insurance.

Assess Your Budget

The first step to buying an insurance policy is to be mindful of how much monthly premium you can pay for your business. After analyzing your budget, you should then look into the potential rate of incidents and other legal requirements of the policy. This makes it easier for you to look into policies and then compare them with the amount of coverage they will offer for your business.

Ascertain Risk and Exposure in Your Industry

Every business is different regarding the risks associated with its industry. Professional liability insurance is not one size fits all solution. You will need to analyze your industry and look into the risks you might encounter as a professional service provider. It will help you decide your coverage cost. For instance, an interior designer might need a lower coverage amount than a doctor or a stockbroker.

Contract Conditions

Before buying any insurance policy, it would be best to read their terms and conditions. It is good to know about things the insurance covers. Still, most importantly, you should know what your insurance provider will not cover. You can also do a quick market analysis and look into policies bought by your competitors. It helps you narrow down your list and choose the best one for your business.

How to Buy Professional Liability Insurance in Canada

Buying professional liability insurance for your company regardless of its size has become necessary in the current scenario. You might face a situation where your client will perceive a service and sue without any mistake from your side.

However, searching for insurance can be a tedious task. Scrolling through tens of pages on Google and doing market research on your competitors can take up a lot of your precious time. Instead, you can use Comparewise to look for the best insurance providers in your area.

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Comparewise is a local Canadian company that understands the needs of businesses in this country. They have a vast database of insurance providers, which you can search through using categories and other filters. Our platform also offers a “Get Started” option on the homepage. Here you have to enter all your requirements, along with the budget and the size of your company. Our smart algorithm will suggest the best insurance providers based on your needs.

Comparewise is available anywhere in Canada, saving you all the time it would take to plan and set multiple face-to-face meetings with insurance providers.

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FAQs about
Professional Liability Insurance

What is professional liability insurance?

Professional liability insurance will cover the costs arising due to lawsuits filed by your clients either due to misrepresentation or negligence of services. Even if you have general liability coverage, you still need to insure your professional services with this insurance. This is because general liability coverage does not offer protection to clients against claims arising out of business practices like malpractice, negligence, or misrepresentation.

Why do I need professional liability insurance?

Not all your advice may turn out to be good. As a professional service provider, you advise your clients after studying the history and analyzing a product. There is a good chance that you might miss out on a thing or two, which leads to a loss for your clients. It would be best to have professional liability insurance to ensure your business’s continuity.

How does professional liability insurance work?

The primary purpose of professional liability insurance is to protect insurers against any claims filed by their clients. It is generally in respect to professional services or consultations offered. These claims can arise due to negligence or error in providing a professional service to your client, causing a substantial financial loss to them.

Who needs professional liability insurance?

Professional liability insurance is not specific. The coverage will depend upon the risks of your business industry and the size of your company. You will need to customize your plan based on your unique business model.

Some professions that may need professional liability insurance are

  • Insurance agents
  • Real-estate agents
  • Management consultants
  • Graphic designers
  • Lawyers
  • Architects
  • Accountants
  • Photographers
  • Interior decorators
  • Counsellors
  • Financial services
  • Legal professionals

Professional Liability Insurance
made Simple

No obligation, Free to apply

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