Being sued in court for even a minor complaint is expensive to defend. The burden is eased, though, if you have professional liability insurance.
According to Meredith Little at TechRepublic.com, one should expect to pay between $1,000 and $1,450 per year for professional liability insurance. While this is a general average, the specific amount you would have to pay is based on a wide range of factors, many of which are out of your control. Any professional who provides a service to businesses or individuals could be sued by an angry client, so it's important to maintain a minimal level of liability coverage.
Professional Liability Insurance
Professional liability insurance is a type of insurance coverage that pays for damages you are found responsible for by a court of law. For example, malpractice insurance is a kind of liability insurance specifically for doctors, but most other professionals need liability insurance, as well. A painter who is painting the exterior of a large house might have an accident where his scaffold collapses and kills someone passing by. While the death may be determined to be an accident, that does not stop the family of the deceased from bringing a negligence suit against the painter. If the painter is found guilty of negligence but does not have liability insurance to pay the plaintiff, he could very likely lose everything he owns and have to declare bankruptcy.
Where to Find It
If you already have other kinds of insurance with a particular company, then ask that company if they also offer professional liability insurance. Many larger insurers do, but often their policies are fairly general, and might not meet your specific needs. Look for companies that specialize in professional liability insurance. If your line of work carries a particularly high risk for liability, such as putting out oil well fires, then you might have to seek insurance from a non-admitted insurance carrier that is not licensed and regulated in your state. This will generally mean higher premiums for you, but will allow you to get the coverage you need.
Variables in Cost
While you can generally expect to pay $1,000 to $1,450 per year for one million dollars of professional liability insurance, your actual premium will depend on factors like your location, the amount of money your company generates, the nature of your business and the levels of coverage you want. For instance, as a landscaper, you may only need a $1 million per incident policy with a $2 million annual cap. A surgeon, on the other hand, might need a $10 million per incident policy, with a $50 million annual cap.
While your specific industry -- and therefore the amount of risk your job entails -- matters a great deal in setting premiums, other factors that are specific to you are also taken into account. For instance, your experience. A new business consultant should expect to pay a higher premium than a business consultant who has been practicing successfully for 20 years.
Strategies for Saving Money
You can save money on liability insurance by buying only what you actually need. For instance, a building contractor will need a high level of coverage for bodily damage and heavy equipment. A software documentation specialist, on the other hand, needs a much lower level of coverage for bodily damage, but might need a rider created for "intellectual property," in the event that a client sues the specialist for stealing an idea or program.
Furthermore, remember that professional liability is a business expense, so it is tax deductible.
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