Does Your Business Need Professional Liability Insurance?

An unexpected lawsuit could derail your business growth, with the risk of bankruptcy becoming very real in a worst-case scenario. If a client were to sue you tomorrow, would your business be able to survive?

For many small and medium-sized business owners, the answer is no. Litigation can be incredibly expensive. Even if you aren’t found to be at fault, the time and cost of defending yourself could cripple your business.

Professional liability insurance is the most effective way to protect yourself from the cost of defending claims of negligence. At Moran Insurance, we provide coverage, along with comprehensive commercial insurance ranging from auto to property.

Learn more about professional liability insurance and find out if you need a policy moving forward.

Professional liability lawsuits range in scope. They are generally based around a perceived failure to adequately provide a product or service that a client has paid you for. This can include a breach of contract, negligence, or failure to uphold accepted industry standards.

For a claim to be valid, the complainant typically must prove one of the following:

  • Your product or service failed to meet reasonable standards. While interpretation in this area can vary, a complainant needs to prove that your product or service was not on par with what is widely accepted in your industry. For example, an electrical company that wires a home with an unacceptable number of faults could face a professional liability lawsuit.
  • The service performed was in breach of your reasonable duty. This one is harder to prove and requires evidence. All cases are different when it comes to reasonably establishing your duty. However, one area where there is no ambiguity is if you breach a signed contract. In this instance, the complainant will have a strong case against your business.
  • You cause damages (fiscal or otherwise) to a client due to negligence or a breach of contract/standards.

In the litigation process, lawyers on both sides will try to establish the facts. They will determine whether you met standards, breached any contracts, or caused any damages. This process can be time-consuming and expensive, and when you don’t have professional liability insurance, you will have to shoulder these costs out of pocket.

For small businesses and even well-established medium-sized businesses, paying legal costs for a liability case is unfeasible. Professional liability protection in Florida will ensure you have financial coverage when you need it.

Reducing Your Exposure to Professional Liability Lawsuits

There are ways to reduce your exposure to these kinds of lawsuits effectively. While these don’t negate the need for professional liability insurance, they will reduce your risk of legal action, which will benefit your business.

One of the simplest ways to prevent lawsuits is to use unambiguous contracts that state your obligations to the client, lead times, and expected compensation. When you develop a business culture where every staff member adheres to contracts, you drastically reduce your chance of facing litigation. It’s important to vet your contract templates with a legal professional to ensure that they are valid.

Records also help to prevent lawsuits and reduce any time spent dealing with complaints. Effective use of CRM (Customer Relationship Management) software will allow you to record all interactions which you can then use as evidence to fight an invalid complaint. Modern CRM solutions can even link to your telephony system to record voice calls and verbal agreements.

However, even when you have safeguarded yourself with professional liability insurance and robust internal procedures, you should keep the basics in mind. Misunderstandings are a leading cause of professional liability lawsuits. Remaining communicative and transparent could significantly reduce the risk of complaints being raised.

Professional Liability Insurance in Florida Gives You Peace of Mind

Of course, no matter what you do to protect your business from lawsuits, there will always be some risk that a client files a liability suit against you. Even if you aren’t in the wrong, the financial cost and damage to your reputation could be too high to recover from. With the many lawsuits in the U.S.,  frivolous lawsuits alone cost the United States $200 billion every year. Imagine what one suit could do to your company.

Professional liability coverage from Moran Insurance provides you with financial security, no matter the scenario. Your coverage will allow you to create a legal defense without paying the full cost out of pocket, and you’ll be able to focus on your business without the stress of financial ruin.

Any company that engages directly with consumers or organizations should have business liability insurance.  Contact Moran Insurance today to explore policy options and learn more about professional liability coverage.