What happens if you don’t have professional liability insurance?
2 minute read
Whether you’re an architect, accountant, engineer, or consultant, you’ve likely spent years refining your skills so you can provide your clients with the best service possible.
However, when setting up your business, professional liability insurance can often be overlooked. This type of insurance protects professionals from unexpected mishaps in their work. It acts as a safety net, just in case a client has issues with your work.
When you operate a professional services business, you’re likely to handle sensitive client information and provide work that directly effects another person’s personal life or business. Professional liability insurance may provide coverage in the event of errors or omissions and financial losses.
What is professional liability insurance?
Professional liability insurance can help safeguard you or your small business in the event of a lawsuit if a client decides to take legal action against you due to the professional services you provided. This could be because poor advice was provided or the work failed to meet expectations.
How can professional liability insurance protect you?
Professional liability insurance protects you from claims made by clients and other third parties. These claims can arise from:
Professional negligence
Loss of documents
Errors and omissions
Infringement of intellectual property rights
Poor advice
Libel and slander
Unintentional breaches of contract
What happens if you don’t have professional liability insurance?
Without professional liability insurance, professionals and small businesses are vulnerable to potential risks, including:
Lack of coverage for errors or negligence
Professional liability insurance can help cover the costs associated with errors, mistakes, or negligence that may occur when providing professional services. Without it, you may be personally responsible for any damages caused by your professional actions or advice, leaving you financially liable.
Inability to secure contracts or clients
Many clients and businesses require proof of professional liability insurance before entering into contracts or partnerships. You may lose out on business opportunities because potential clients or partners see you as a higher risk without adequate insurance.
Financial losses
Financial difficulties can also arise in the event of a contractual dispute. If you are found liable for damages, you may be required to pay significant amounts of money to the affected party.
Regulatory and legal compliance
In some cases, obtaining professional liability insurance may be a regulatory requirement. Failing to comply may result in penalties, fines, or even the suspension of licenses or certifications, preventing you from practicing your profession or operating legally.
Damage to reputation
Damage to your reputation can be severe. In the event of an unforeseen mistake, potential business opportunities might be harder to come by. Rebuilding your reputation after such an incident can be challenging and time-consuming.
Professional liability insurance is an essential component of a comprehensive risk management strategy. It can help offer peace of mind, allowing you to focus on providing the best service to your clients without worrying about the potential consequences of unexpected mishaps.
Who needs professional liability insurance?
While professional liability insurance is not a legal requirement for all professions, those who provide services for a fee often find insurance coverage to be a smart move.
Here are some professionals who may want to consider getting coverage:
Accountants
Architects
Cybersecurity specialists
Copywriters
Consultants
Engineers
Graphic designers
Medical professionals
Photographers
Project managers
Software developers
Tax preparation professionals
Website designers
Writers
Secure your business with professional liability insurance today
Even the most skilled professionals can make mistakes, and unforeseen costs, settlements, or damages can be overwhelming without professional liability insurance.
Don’t let the risks of running a professional services business jeopardize your hard work and success. Secure your business today with a TruShield policy and get back to providing your clients with the best possible service. Get a quote today or learn more on our professional liability insurance page!
This blog is provided for information only and is not a substitute for professional advice. We make no representations or warranties regarding the accuracy or completeness of the information and will not be responsible for any loss arising out of reliance on the information.
