Professional Liability: What Michigan Business Owners Need To Know
What Is Professional Liability Insurance?
Professional Liability Insurance, also known as errors and omissions insurance or E&O insurance, protects your Michigan business against claims that a professional service you provided caused your customer to suffer financial harm due to a mistake on your part (errors) or because you failed to perform some service (omissions).
Most professional businesses, who are regularly consulting with their clients because of their expertise, have a professional liability exposure. Purchasing a professional liability policy would protect and defend your company should you ever be found liable for a client’s bodily injury, property damage, or financial loss as a result of the consulting provided.
If the mistake was on your part, it’s an error. If your company failed to perform a service, it’s an omission. Therefore, Professional Liability Insurance is often known as errors and omissions (E&O) insurance.
If your company is involved in a civil lawsuit and certain damages are awarded, E&O insurance helps cover the cost of defending your company, even if the action is groundless. Some industries actually require you to have proper Professional Liability Coverage. This is especially true for legal and medical companies where E&O is more commonly referred to as malpractice insurance.
Professional liability isn’t included unless specifically written into your policy.
What Does Professional Liability Insurance Cover?
So, what does coverage typically include? Negligence, misrepresentation, violation of good faith and fair dealing, and inaccurate advice. The application that is obtained and signed becomes part of the E&O policy, otherwise known as a warranty policy. And as such, E&O policies have very specific wording in how they respond to exposure.
Who Needs Professional Liability Insurance & Why?
Having extra protection for your Michigan business is great in the event a client takes you to court. It strengthens your defense and helps cover some of the cost of the legal bills.
Businesses that typically purchase Professional Liability Insurance include medical providers, attorneys and other legal service providers, accountants, general contractors and others.
Michigan, Start Protecting Your Business Vitals BEFORE It’s Too Late!
Your local Compass Insurance agent can help make sure your E&O insurance is customized specific to your business. They can explain the risks of your industry and what areas are exposed.
If you already have a professional liability policy, Compass Insurance Agency can identify any gaps in your coverage that may exist and also be able to provide options to close those gaps.
It’s no secret E&O insurance varies wildly in cost. Keep in mind this all depends on your business, location, if you’ve had past claims, how much coverage you have, and the retroactive period. Make sure you present past E&O coverage or claims to your agent as part of your application.
Don’t keep your business exposed to potential risks. Call a Compass Insurance Agent today at 616-965-6272!