7 FAQs about Professional Liability Insurance in Florida
February 6, 2017
As a business owner, you probably see risks all around you. A business is like a child, and you are constantly putting your child’s wellbeing in the hands of other people, such as employees, other businesses, clients or customers, and so on. With all of the possible things that could go wrong, you might wonder what options are out there to protect your business.
One way that many people opt to protect their business is to get professional liability insurance.
Some of the Most Commonly Asked Questions about Professional Liability Insurance
Who Needs Professional Liability Insurance?
Anyone who works in a field that receives advice or counsel from other businesses or organizations could benefit from professional liability insurance. Conversely, if you provide advice to businesses, you run the risk of getting handed a lawsuit for that advice, and you can use your professional liability insurance to cover the costs.
If you are employed in any of the following professions, professional liability insurance may give you peace of mind as you work:
- Cleaning Services
- Food Service Industry
- Graphic design
- IT consulting
- Insurance (health, auto, etc.)
- Real estate
Specific professional liability insurance plans are available for individuals in particular professions, like lawyers and doctors. medical malpractice, are often much more serious cases and can end up costing you a lot more.
What Does Professional Liability Insurance Cover?
When you depend on the work of others for your business, you don’t always have control over the actions of everyone involved. You put your work (and ultimately, a part of your profit) in someone else’s hands, so you should be able to hold them responsible for any errors or negligence. General liability insurance does not always give you this opportunity, but professional liability insurance does.
All professional liability plans are different, but in general, they can cover the following:
- Administrative errors
- Defamatory statements
- Violation of Good Faith
- Fair Dealing
- Inaccurate Advice
Professional liability insurance may also be referred to as errors and omission (E&O) insurance.
Why Is This Important?
Even if you believe that your business practices are solid and that your customers are satisfied, you may be hit with a lawsuit. In 2013, the US Chamber for Legal Reform recorded that 43% of small business owners were either involved in a lawsuit or were threatened with one.
Lawsuits are expensive. No matter what side you sit on, you will have to cough up thousands of dollars in legal and court fees. Plus, your business could make headlines with the lawsuit, and the cost of your reputation being damaged is unmeasurable.
What Damages Can I File For?
Professional liability insurance will cover the legal fees and costs for legal representation. The insurance can also cover financial losses, but insurance typically doesn’t provide compensation for non-financial damages. (Some costs, like licensing board fees, are negotiable.)
You may not be able to receive compensation for intentionally dishonest or malicious acts. You will have to check with your insurance provider to see where they draw the line.
How Much Does it Cost?
Professional liability insurance costs a small business, on average, just under $1,000 a year. The median cost, according to Insureon.com, is $758.00. Plans range in cost depending on the size of your business and what situations you want covered.
A graphic designer who works with smaller-scale clients may have a smaller plan than, for example, an architecture firm that builds large skyscrapers. Negligence can cost an architect a whole lot more than negligence costs a small-scale graphic designer.
If you do need to file a claim, your deductible will vary as well. Deductibles can range from $1,000 to $25,000, depending on the scale of the claim and how much you pay throughout the year.
How Much Does It Cover?
The cost of the insurance per year is usually determined by the limits of the insurance. Professional liability insurance is usually presented through its occurrence/aggregate limits.
The occurrence limit is how much the insurance provider will pay for a single claim. The aggregate limit is how much the insurance provider will pay for all claims throughout the policy’s life. The provider may offer, for example, $1m/$2m policies, $1m/$1m policies, and so on.
What Happens If My Claim Isn’t Covered?
These limits don’t always cover all of the damages that your business needs to recover due to someone else’s negligence. Moreover, your insurance may not help pay for any compensation that you are required to pay to another business.
This is where a lawsuit comes in. If you are seeking additional damages, or seeking any sort of damages without the help of professional liability insurance, get in touch with a Florida professional liability lawyer.
About the Author:
Since 1994, seasoned litigation and trial lawyer Anthony B. White has helped thousands of accident victims seek damages due to injuries sustained as a result of another party’s negligence. Included in America’s Registry of Outstanding Professionals and selected to the 2012, 2013, and 2014 editions of Florida Super Lawyers, Mr. White specializes in car accidents, insurance disputes, wrongful death, product liability, and medical malpractice cases. He is a longstanding member of the Florida Justice Association and the American Association for Justice and currently sits on the Board of Directors of the Broward County Justice Association.