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How to Get Professional Liability Insurance

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At least 37% of small businesses in Massachusetts shut down because of the COVID-19 pandemic. If you were lucky enough for your business to survive, or if you are beginning to rebuild, this guide is for you.

Because of the pandemic, businesses are placing more importance on insurance. One of the policies that can benefit various industries is professional liability coverage.

Not sure how to get professional liability insurance? Keep reading to find out.

What Is Professional Liability Insurance?

Before learning how to get professional liability insurance, it's important to know what it is and what it covers. This type of insurance policy can protect companies against these claims:

  • Breach of contract
  • Professional negligence or failure to meet the "duty of care"
  • Errors or omissions
  • Failure to meet a promised deadline

Professional liability insurance, also known as errors and omissions (E&O) insurance, can cover the above claims, including legal and settlement costs.

Who Needs Professional Liability Insurance?

Any business can apply for professional liability insurance. It's especially important for professionals that provide advice and services to a client in exchange for money.

Business professionals that need this insurance include, but are not limited to, the following:

  • Accountants
  • Consultants
  • Financial advisors
  • Real estate agents and brokers
  • Graphic designers and software developers

In some fields, professional liability insurance is required.

Applying for Professional Liability Insurance

To apply for professional liability insurance, you'll need to gather basic information about your company and its operations. When you have the right information readily available, applying only takes a few minutes.

You can start by gathering financial documents, such as:

  • Current fiscal-year revenue
  • Projected revenue for the following year
  • Total payroll amounts
  • Amount of revenue generated by your largest customer
  • Executive compensation totals

In addition to financial information, you'll have to provide general business information, like:

  • Types of employees and how many you employ
  • The business structure of the company (corporation, partnership, LLC, etc.)
  • The inception date of your business
  • Contact information for each business location
  • Brief description of what your company does

If you own 3% or more of a client company, you must note that revenue. If you share 51% or more of a subsidiary business, you need to have those insurance policies available.

One of the most important factors when you apply for E&O insurance is client contract information. You'll need the following information for your application:

  • The purpose of client contracts
  • The percentage of clients you have contracts with
  • Whether or not you require subcontractors to have professional liability insurance
  • How often you amend, update, or modify client contracts

Lastly, you'll need detailed documents regarding your insurance and claims history. For example, the application may ask whether or not you've had professional liability insurance in the past. It may also ask:

  • The deductibles and limits of policies you've had in the last year
  • Any claims you made with previous or current E&O policies
  • Ongoing disputes that could lead to a future claim

With these details and documents, you can apply for professional liability insurance through an online application.

The Application Process

Once you have your documents gathered, the application process is pretty straightforward. After filling out all of the questions and information that the application asks for, you'll receive your paperwork.

Insurance quotes are sent to you to give you a better understanding of how much your insurance premiums will cost each year.

The insurance policy itself is a 50 to 100-page document that summarizes the type of coverage offered. The policy sets:

  • Deductibles
  • Coverage limits
  • Premiums

If you agree to the terms of the policy, you'll receive a certificate of liability insurance. This will act as your proof of insurance. Clients may ask for this certificate before agreeing to work with your business.

What's in Your Insurance Policy?

A professional liability insurance policy defines the obligations between the insurer and you. In basic terms, the policy states that you'll pay premiums to receive certain coverage. However, a policy is much more than this.

Policies include declarations at the beginning of the document that will state essential details and how to contact your insurer.

The insuring agreement legally details exactly what is covered in your policy. It also explains how costs are assessed against policy limits, among other important details.

You'll have conditions that require you to communicate with the insurer. You'll always need to tell them when a claim is made against your company.

The insurance policy will also include endorsements that can exclude or add coverage types. It can also change clauses in your insuring agreement or redefine policy terms.

How Much Is Professional Liability Insurance?

You are quoted for your insurance policy once you apply. The cost of coverage will depend on these factors:

  • How common claims are in your geographical area
  • How common lawsuits are in your industry
  • How many employees you have
  • How much coverage you need
  • How long you've been in business
  • What kind of claims you've filed in the past

To save money on your insurance policy, pay in full for the entire year. This is more cost-effective than when paying monthly.

You should also bundle policies with Econosurance to save a significant amount of money protecting your commercial property.

How to Get Professional Liability Insurance: Explained

Now that you know how to get professional liability insurance, you can start your application today.

First, you'll need to research insurance providers and gather business documents to complete the application process.

We've made the first step easy for you. At Econosurance, we offer professional liability insurance for fair rates. Get a quote from us today.

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