All businesses involve risks. Depending on the nature of work and the sector of its operations the risks to the organisation are dependent. If not prepared to tackle these risks, it can often lead to legal liabilities. For that purpose, it becomes necessary to have a liability insurance for your organisation. With a liability insurance plan, any financial obligations that arise on the business, either due to shortcomings or inability to adhere to the terms of the contract are covered by this insurance policy.
A business does not mean solely trade of goods, but also rendering of professional services. Not all organisations who are involved in a business, trade or manufacture a commodity, but some provide services. A professional liability insurance is that which shields your business against the claims made by clients. These claims may either be due to various reasons not limited to insufficient performance, incomplete services, errors or omissions and more. Moreover, these policies are not only available for service organisations, but also for individual rendering services.
Professionals handle large amounts critical data for its clients. This is required so that they can render appropriate consultation and then translating to required services. With such high confidential information at stake, it becomes essential to purchase some for of insurance coverage. Any slippages or errors can have a financial loss for your clients and thus, resulting in claims on your organisation.
The working of a professional liability insurance
A commercial insurance sought is based on the idea of protecting the professional and businesses against the claims initiated by your clients. These claims can be due to various reasons, some of which include malpractices, negligence and even errors. However, the impact of these claims can in the cash flows. To avoid such unwarranted liabilities, a professional liability insurance comes to the rescue.
This policy covers the events that correspond only during the policy tenure. Any claims made for the events that occurred beyond the policy’s commencement date is not covered under its purview. However, some plans are offered with coverage for retrospective events. Since the policy scope also covers the events that took place in the past, it provides a broader coverage for you, the policyholder. So, it is advisable to look for a policy with such retrospective coverage.
Who should purchase a professional liability insurance?
To generalise, all organisations that render services must invest in a professional liability insurance cover. Some businesses that deal with your organisation may stipulate a mandatory requirement to obtain such coverage. This is because of the reduced chances of not being compensated for any slip ups during your services. Accountants, financial advisors, solicitors, architects, chartered surveyors, healthcare professionals, legal professionals, third-party business administrators, transportation providers, etc are some of the areas where a professional liability cover does good.
Benefits of professional liability insurance
A rundown of the benefits of a liability insurance is as follows:
- Some organisation that exclusively deal in services benefit by purchasing group policies for its professionals to limit their liability. This way, all the professionals are insured with the same coverage thereby limiting their personal liability.
- With a comprehensive coverage based on the nature of service, professional liability helps to tackle unexpected financial liabilities arising in the course of routine work.
- Some plans also include coverage for defence costs, i.e. fees payable to defend your case in the court, other charges, etc.
So, if your nature of work involves rendering of services, make sure to buy a professional liability cover today! Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.
