When starting your own business, you have a lot of things to keep in mind. There’s a lot of preparation required to ensure your new business venture is legal, and that it’s protected.
So after getting all of your degrees, licenses, certifications, and becoming legal, you need to protect your business by getting the right insurance policies in place. The specific business protection that you invest in will differ depending on your industry.
All businesses are going to need general liability insurance, however. This protects your business from accidents where someone gets hurt or something gets damaged on your property or by your business operations.
But certain types of businesses require a more specialized business policy known as professional liability insurance. Wondering if that’s you? Keep reading to learn who needs this type of policy and how to choose the right business coverage for your practice.
Difference Between General and Professional Liability Coverage
General liability coverage is one of the most important business tools to invest in from day one. This policy will protect businesses from accidents, which are bound to happen eventually. If an accident happens and someone tries to sue your company, your general liability insurance policy may cover those expenses.
For example, if you own a restaurant and mop the floor, but forget to put out a wet floor sign, a customer might slip and hurt themselves. In this case, they may be able to sue your business.
Liability insurance is intended to protect your company from having to pay these types of fees out of pocket. Of course, investing in company safety should be a priority to prevent accidents in the first place.
Or say your business sign, hanging on the front of your building, falls onto someone’s car, causing lots of damage. Rather than paying for these expenses out of pocket, your general policy may cover it on your behalf.
So general liability insurance is meant to cover physical damage or harm caused directly by your company, employees, or products.
Professional liability insurance, also known as errors and omissions insurance, is a little less tangible. Say that you are a financial advisor. In this case, you spend your days providing investment and financial advice. If a client takes your advice and loses a lot of money, they might try to take you to court, since they have lost money because of you.
Professional liability coverage is meant to protect you if you are liable for bad professional advice.
Who Needs Professional Liability Coverage
So what types of businesses need this type of specialized company protection? Any type of business that provides professional advice or recommendations.
This can include, as mentioned earlier, financial and tax advisors, as they guide people to make important decisions regarding their money. You can include accountants and auditors in this category as well.
Consultants should also invest in this policy. Because they are providing advice to businesses, the outcomes can have major financial implications.
Architects and engineers provide plans and recommendations for buildings. Their expertise is meant to make buildings safer. But if something they design or recommend fails, they could be taken to court as well.
Choosing Professional Liability Coverage
So you know you need a professional liability policy, right? But how do you choose if you’ve never had this type of insurance before? Here are some things to keep in mind.
Caters to Your Industry
Some business insurance providers focus on specific types of industries or businesses. For example, some will focus on architects and designers, while others may specialize in serving counselors and therapists.
Also, some insurance providers are better suited to companies of a certain size. If you are a one-person company, there will be insurance providers that cater to your type of business, while others focus on larger, corporate clients like architecture or accounting firms.
Insurance Cost
Cost is a consideration, though it shouldn’t be a big factor. Although nobody likes to pay for insurance, it’s crucial for the long-term success of any business to have the right insurance in place.
The professional liability insurance cost for your business will depend largely on your industry. Some businesses are deemed risker than others, and thus, will pay a little more for protection.
Those who design buildings, such as architects and engineers, can expect to pay a little more than others. That’s because errors in building plans aren’t uncommon. And when they do happen, they can pose a huge safety concern and can be costly to repair.
Accountants generally enjoy lower premium costs, as their business model is deemed low risk in the eyes of the insurance provider. If they do make mistakes, they can often be repaired retroactively for little or no cost.
Customer Reviews
Once you narrow down your list of insurance providers you might like to purchase from, be sure to research customer reviews. These provide helpful insight into the company you are considering.
But don’t just read the reviews listed on the company’s website, as they are always cherry-picked to bolster their image. Rather, read third-party reviews, such as Google reviews and the Better Business Bureau (BBB).
Although there are likely to be some negative experiences, it’s important to see how the insurance provider makes it right after the fact. You want to get a glimpse into the level of customer service and support provided by the company.
Of course, you hope to never have to file a claim. But when you do, you want to know that there are going to be real people there to help you out and make the process as easy as possible for you.
Business Protection Is Vital
Whether you run a one-person private practice, or you run a company with 100 employees, you need to invest in business protection with the right insurance policies.
Company protection ensures that your business stays around for a very long time, even through the hard times and the mistakes. There’s no reason to skip business insurance, unless you’d like to fail and be left with nothing in the future. And why would you want to do that?
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