What is Professional Liability Insurance?

Professional liability insurance is business insurance. It provides maximum coverage for businesses and professionals, such as accounts, attorneys, audit farms, and consultants, to protect against mistakes, claims, and negligence from clients.

Generally, the service is also called error and omission coverage or professional protection insurance. A professional liability policy can cover the damages that are caused by something you do.

What Does Professional Liability Insurance Cover?

JProfessional or business liability insurance generally covers alleged or actual negligence, which is providing fraudulent services, such as giving false information, incorrect advice, and failure to deliver services to clients.

Some of the examples have been given below which are covered by the liability insurance policy:

  • Mistakes, fraud service provided, and error

  • Missed deadline

  • Delayed Services

  • Negligence and failure to meet the standards

  • Lack of secrecy

Some of the examples have been given below which are not covered by the liability insurance policy:

  • Discrimination lawsuits

  • Criminal prosecution

  • Employee injuries

  • Desecration of business property

  • Customer damages and injuries

Moreover, the liability insurance policy can protect you against a previously performed service. However, the cover would be done according to the insurance policy.

How Much Does Professional Liability Insurance Cost?

The average cost of professional liability insurance is around $60 a month. Your industry may affect the cost directly in this policy.

According to our research, the cost of insurance is $61 per month on average for a small business. Depending on the company, the cost may vary. A small business should pay around $735 per annum.

However, most of the service holders pay a premium cost which is between $50 and$100 every month on average for their professional liability coverage. Besides, customers want to pay the median price and avoid the high price, because expensive deviation can blow up the average service cost.

According to our sources, we have collected that about 32% of people pay $50 per month for the insurance cost. About 39% of the people pay between $50 and $100 every month. And there are only 29% of people who are paying more than $100 every month on average.

Do Consultants Need Professional Liability Insurance?

If you advise your clients and customers directly, you should add a professional liability insurance plan for your consulting business. Suppose a customer sues you and says that you have made a mistake then you will pay from your pocket if you do not have insurance.

Different kinds of advisors benefit from liability insurance. Some of the examples have been given below to understand better at a glance:

  • Market Research

  • Business Communications

  • Economic Research

  • Expensive Savings

  • Organization Structure

  • Weddings and many more

Even experienced consultants make mistakes. And it means you can face a liability risk at any moment. By giving false information, your customer can lose a huge amount of money.

And this way, your clients can sue you which will be incredibly harmful to your career, if you don’t have liability insurance. So, to protect your business, it is essential to take professional liability insurance.