It’s hard to argue against insurance being a good idea.
Unfortunately, it’s viewed by many people as a safeguard against something that might never happen (over 36 million Americans go without health insurance even in the face of guaranteed mortality) and too often is deemed an unnecessary expense. Many professionals decide to adopt the same overly optimistic outlook. While it’s good to be a confident provider of a service, forgetting that the market (and consumers) can be a costly thing to gamble on, can make a professional their own worst enemy.
Professional Liability Insurance (PLI) is also known as errors and omissions (E&O) and professional indemnity insurance (PII). It’s a separate kind of protection from commercial general liability insurance so don’t get those confused.
PLI is designed to protect you in the event of error in your professional performance. Like our title suggests, PLI seems an indispensable investment for legal, medical or accounting professionals. Any error in those fields can obviously cause serious damage to people and profits. These sectors may be top priority but it’s hubris for everybody else to believe they aren’t going to make mistakes, too.
Important: You could end up facing a liability suit even if you don’t make a mistake. It’s enough to be perceived as having done so.
Where PLI comes into play
It’s reasonable for a client or customer to expect you to know your job and execute it with the required skill set and care. The public doesn’t take kindly to real or perceived instances of:
• Breach of contract
• Negligent service
• Bad advice
• Breach of the law
These are just some of the areas in which you’re at risk without PLI. Anyone who feels you came up short in the provision of your service will likely not hesitate to litigate. The best laid plans can go awry (especially if your professional services are part of a longer service chain of other pros) and you don’t want to be the one who must pay for it.
What PLI protects you from
The benefits of any insurance can be weighed up by considering the potential risks of operating without coverage. If a suit is filed against you, you’re looking at paying legal fees (possibly including those of the plaintiff), compensation payouts, seizure of assets and damage to your professional reputation. There’s no way to quantify the long-term impact of the latter, so it’s the one to guard most firmly against.
How to do that? Clients who know you’re insured against error will likely be more at ease. PLI shows you accept that errors may occur and you’ve taken preparative steps. This demonstrates that you care about your reputation and shows foresight, responsibility and humility. Wouldn’t you be more inclined to hire a professional with those traits?
How to cover yourself
Always be honest with your clients as to what they can realistically expect from your performance and its possible outcome. Don’t promise them the world then leave yourself in a position where you can’t deliver. Keep them informed at every stage and be your own back up by giving your customers confidence but no unrealistic ideas.
Important: If you’re a professional working for a larger entity, don’t be so sure that their PLI is going to cover you. You may well need your own independent policy in place. Likewise, if you are the larger entity or business owner you need to know if your employees or partners need their own PLI.
If you’re operating professionally in Florida (as anything other than a research or training service) then PLI is a must. Protect yourself and speak to a qualified insurance advisor about the best PLI to cover your needs. There are many variables in determining premiums including the location of your business, its type and previous insurance claims. Not every professional runs the same risks so make sure you’re getting a policy that’s tailor-made to cover your back.
If you’re seeking expert advice on coverage, Avante Insurance is a South Florida family owned and operated agency providing an array of services to meet customer’s individual needs. You can call us at 305-648-7070, request an insurance quote or contact us with any questions or comments.